Service industry workers are still quitting at high rates despite recession fears

Leisure and hospitality workers still have leverage in the US labor market
What's out there?
What's out there?
Image: Andrew Kelly (Reuters)
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Service industry workers are still quitting.

Nearly 6% of workers in the US leisure and hospitality industry quit their jobs in August, outpacing the 2.7% rate—which measures the share of employed Americans quitting their jobs—for the rest of the US economy, according to US Bureau of Labor Statistics data. Leisure and hospitality workers, which includes restaurant and hotel employees, are still quitting at higher rates than they were before the pandemic. Overall, the quit rate for all non-farm jobs fell slightly from the month before.

The findings suggest that workers are leaving and finding better jobs, as the high quit-rate can be read as a measure of workers’ confidence in their ability to land jobs elsewhere.

Workers continue to have choices

The demand for workers, particularly, for in-person jobs, gives them an opportunity to negotiate higher wages or more flexible scheduling, said AnnElizabeth Konkel, a senior economist at Indeed, a jobs site.

The restaurant industry has long had high quit rates, but they became worse during the pandemic. Employers have raised wages and doled out bonuses to attract people to fill the roles.

Though concerns of a recession are growing, that’s just one factor employees are weighing. As Konkel noted, if you hear of a family member taking a new job, and your friend is finding a new job, too, you’re going to be more comfortable with the risk of switching jobs, especially if there’s a positive outcome of better wages or more benefits. “Workers are going to take that into account even if there is this recession chatter, and finally balance those two in their mind and then make their decision from there,” she said.

Employees are also expecting higher wages. For instance, Konkel said that workers have been searching on Indeed more for $20-an-hour jobs than jobs that pay $15 an hour. That’s borne out of both curiosity about the opportunities available, but also the factor of inflation driving workers to find higher-paying jobs to offset rising household costs.

The ongoing lack of workers continues to show up, as businesses temporarily shut down stores or limit store hours. As the holiday season approaches, Konkel said that consumer spending could affect hiring plans for service workers.