Introduction

The leisure and hospitality industry is an important barometer of our broader economic recovery, particularly among low-wage workers, and has been disproportionately affected by COVID-19 and related shutdowns of economic activity. After industry employment fell by 48 percent between February and April 2020, leisure and hospitality still has the largest remaining gap between current employment and pre-pandemic employment, a total difference of 1.53 million workers, representing nearly three quarters of the total worker shortfall.[1]

Leisure and hospitality businesses that require in-person work were particularly sensitive to pandemic related policies, such as vaccine mandates and capacity limits. Related economic shutdowns forced thousands of these businesses to permanently close. Those that remain open have found that workers are returning slowly which in part could be due to the effects of enhanced and extended unemployment benefits and stimulus payments. In order to shed further light on these patterns, this issue brief documents the characteristics of workers in the leisure and hospitality industry, how these workers were affected by the COVID-19 pandemic, and their future outlook.

Labor Force Makeup

Workers in leisure and hospitality are typically younger, on the lower end of the wage distribution, and more likely to be Hispanic compared to other industries. These demographic groups are already more vulnerable than others to major economic shocks and tend to experience higher rates of long-term unemployment given their lower educational attainment relative to the rest of the labor force.

Age

One of the unique features of the leisure and hospitality industry is its high concentration of young workers. As shown in Figure 1, before the pandemic-related shutdowns uprooted the industry, over 60 percent of the workers in the industry were under the age of 35, compared to just over 30 percent of workers in other industries.

Figure 1: Pre-Pandemic Leisure and Hospitality Workforce by Age

^{Source: Author’s calculations Current Population Survey American Social and Economic Supplement 2019 and 2020[2]}

Younger workers are more vulnerable to economic shocks given they have fewer marketable skills, less education, and lower levels of saving. Consequently, they are more likely to experience long term unemployment if the leisure and hospitality industry is unable to quickly return to pre-pandemic levels. According to the Pew Research Center, nearly half of all workers ages 16 to 24 were employed in the service sector in 2019. In times of high unemployment, young workers typically have greater difficulty remaining attached to the workforce because they are forced to compete with workers who have more experience and higher educational attainment. In a situation of mass layoffs, younger, less experienced workers are also typically the ones most likely to be let go and we saw this happen at the height of the pandemic. Between February and April of 2020, the unemployment rate among all workers (16+) rose by 11.2 percentage points, while the unemployment rate for the youngest workers (16-19) increased by 20.9 percentage points.[3]

Education

Unsurprisingly, an industry that skews younger is one that has a low concentration of individuals with advanced, let alone terminal, degrees. Just over 13 percent of the industry is under 18, the majority of whom have likely not yet graduated high school, assuming they are on track to do so. Additionally, a quarter of workers in leisure and hospitality are Hispanic or Latino, the demographic that has the lowest educational attainment compared to White, Black, and Asian workers.[4] Almost 20 percent of the leisure and hospitality workforce did not graduate high school and more than half have a high school degree or less. The industry has twice as many workers with high school degrees as those with a bachelor’s degree, a ratio that is nearly one-to-one across all other industries.

Figure 2: Pre-Pandemic Educational Attainment in Leisure and Hospitality

^{Source: Author’s calculations Current Population Survey: American Social and Economic Supplement 2019 and 2020[5]}

Disproportionate Impacts of COVID-19

Unemployment

Following a drop in employment as a result of the Great Recession, the leisure and hospitality industry experienced steady growth from 12.9 million workers in 2010 to 16.9 million at the beginning of 2020. The COVID-19 pandemic disrupted over ten years of job growth when in April 2020 employment dropped by nearly 50 percent, reaching employment levels that had not been seen since the 1980s.[6] The unemployment rate rose across all industries, but was more than twice as high in the leisure and hospitality industry, as seen in Figure 3. The leisure and hospitality industry made up 40 percent of all job losses at the height of the pandemic (February 2020 to April 2020). While the economy-wide unemployment rate has improved, the leisure and hospitality unemployment rate remains nearly double that of all industries (see Figure 3).

Figure 3: Unemployment Rate by Industry, February 2019 through February 2022