More than 180,000 workers have left the restaurant sector. Most have become white-collar workers — and they’re not coming back
By Jacob Lorinc
Business Reporter
Wed., Oct. 13, 2021
Wages and COVID-19 restrictions pushed workers out of the restaurant and food services industry and into professional service roles in white-collar sectors, according to an analysis by the Canadian Centre for Policy Alternatives (CCPA).
By February 2021, almost a quarter-million workers in Canada who used to be employed in food and accommodation had found new jobs outside that sector, many of them switching to roles as secretaries or assistants for accountants, lawyers, architects and more, the study finds.
Employment in food services is now 14.8 per cent below its pre-pandemic level, according to Canada’s September labour-force survey. That’s an improvement from the worker shortages during third-wave restrictions earlier this year, but it means there are still 180,000 workers who left food-service positions in February 2020 and never returned.
It’s no surprise restaurant workers have flocked to secure jobs with higher wages, said David Macdonald, senior economist with the CCPA and author of the report, titled
Wed., Oct. 13, 2021
Wages and COVID-19 restrictions pushed workers out of the restaurant and food services industry and into professional service roles in white-collar sectors, according to an analysis by the Canadian Centre for Policy Alternatives (CCPA).
By February 2021, almost a quarter-million workers in Canada who used to be employed in food and accommodation had found new jobs outside that sector, many of them switching to roles as secretaries or assistants for accountants, lawyers, architects and more, the study finds.
Employment in food services is now 14.8 per cent below its pre-pandemic level, according to Canada’s September labour-force survey. That’s an improvement from the worker shortages during third-wave restrictions earlier this year, but it means there are still 180,000 workers who left food-service positions in February 2020 and never returned.
It’s no surprise restaurant workers have flocked to secure jobs with higher wages, said David Macdonald, senior economist with the CCPA and author of the report, titled
“Tipping point: Pandemic forced restaurant and bar workers into better paying jobs.”
“Restaurant jobs in the sector are harder now than they were pre-pandemic. Not only are you exposed to a deadly health risk, but you have to wear a mask all day, endure customer abuse while enforcing mask and vaccination rules, all while hoping new lockdowns don’t shut your job down for the fourth time,” said Macdonald.
The CCPA tracked monthly labour-force numbers per industry using public data from Statistics Canada to reveal a major sectoral realignment that saw a steep decrease in food-services workers that mirrored an almost-equally steep increase in professional services workers.
The professional services sector has gained 183,000 workers since February 2020 while food and accommodation services lost 180,000.
“This isn’t to say that servers have become engineers, doctors or teachers but, rather, that they’re filling support positions in these industries,” reads the report. “For example, a former restaurant server could become an office manager or secretary. It may also be that those servers have post-secondary education training in these other industries and that repeated shutdowns in food and accommodation pushed them into other jobs.”
Food and accommodation services have long operated on a low-wage business model that relies on easy-to-hire cheap labour to cook, serve and clean at restaurants and bars. Data from Statistics Canada shows that, since February 2020, average hourly wages for food service workers have increased by a matter of cents. The average hourly wage for a full-time industry worker grew by $0.58 between February 2020 and September 2021, from $16.80 to $17.38.
The low wages have worsened the job vacancy rates for these employers, Macdonald says: “Low wages are having a bigger impact on vacancies and the amount that they’ll have to increase wages in order to address those vacancies has grown.”
According to CCPA’s analysis, the job vacancy rate, now at nine per cent, could decline by three percentage points if employers raised their offered wages by $5 per hour.
The persistently low salaries are also a consequence of the beating that restaurants have taken after three lengthy lockdowns since March 2020. According to Restaurants Canada, an advocacy group for the industry, 80 per cent of restaurants have seen their profits decline during the pandemic. Nearly half have consistently lost money for more than a year.
Some hospitality and food services leaders have said they’re facing a labour shortage due to generous social assistance programs that incentivize would-be employees to stay home. Macdonald said the CCPA findings largely negate that theory.
“Our data shows that (the workers) have already returned to work, just in a different sector,” he said.
Workers who shifted to other industries could return to the restaurant business, but it would likely have to be with higher pay and better hours.
In the coming months, Macdonald expects to see a rise in prices for consumers at restaurants and bars as a result of higher wages to retain staff. He also says businesses may turn to automation and on-demand delivery to conserve labour.
More significant shifts will likely be seen when government subsidies expire later this month.
“Absent that government support, business models that are reliant on low-wage labour may no longer be viable,” he said.
“Restaurant jobs in the sector are harder now than they were pre-pandemic. Not only are you exposed to a deadly health risk, but you have to wear a mask all day, endure customer abuse while enforcing mask and vaccination rules, all while hoping new lockdowns don’t shut your job down for the fourth time,” said Macdonald.
The CCPA tracked monthly labour-force numbers per industry using public data from Statistics Canada to reveal a major sectoral realignment that saw a steep decrease in food-services workers that mirrored an almost-equally steep increase in professional services workers.
The professional services sector has gained 183,000 workers since February 2020 while food and accommodation services lost 180,000.
“This isn’t to say that servers have become engineers, doctors or teachers but, rather, that they’re filling support positions in these industries,” reads the report. “For example, a former restaurant server could become an office manager or secretary. It may also be that those servers have post-secondary education training in these other industries and that repeated shutdowns in food and accommodation pushed them into other jobs.”
Food and accommodation services have long operated on a low-wage business model that relies on easy-to-hire cheap labour to cook, serve and clean at restaurants and bars. Data from Statistics Canada shows that, since February 2020, average hourly wages for food service workers have increased by a matter of cents. The average hourly wage for a full-time industry worker grew by $0.58 between February 2020 and September 2021, from $16.80 to $17.38.
The low wages have worsened the job vacancy rates for these employers, Macdonald says: “Low wages are having a bigger impact on vacancies and the amount that they’ll have to increase wages in order to address those vacancies has grown.”
According to CCPA’s analysis, the job vacancy rate, now at nine per cent, could decline by three percentage points if employers raised their offered wages by $5 per hour.
The persistently low salaries are also a consequence of the beating that restaurants have taken after three lengthy lockdowns since March 2020. According to Restaurants Canada, an advocacy group for the industry, 80 per cent of restaurants have seen their profits decline during the pandemic. Nearly half have consistently lost money for more than a year.
Some hospitality and food services leaders have said they’re facing a labour shortage due to generous social assistance programs that incentivize would-be employees to stay home. Macdonald said the CCPA findings largely negate that theory.
“Our data shows that (the workers) have already returned to work, just in a different sector,” he said.
Workers who shifted to other industries could return to the restaurant business, but it would likely have to be with higher pay and better hours.
In the coming months, Macdonald expects to see a rise in prices for consumers at restaurants and bars as a result of higher wages to retain staff. He also says businesses may turn to automation and on-demand delivery to conserve labour.
More significant shifts will likely be seen when government subsidies expire later this month.
“Absent that government support, business models that are reliant on low-wage labour may no longer be viable,” he said.
Jacob Lorinc is a Toronto-based reporter covering business for the Star. Reach him via email: jlorinc@thestar.ca
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