Leisure and hospitality job losses remain the largest pain point in the US labor market. The US economy has seven million fewer jobs in March 2021 than in January of 2020, and nearly half of that jobs gap is composed of lost leisure and hospitality jobs. These job losses are highly dependent on a state’s tourism sector and a state’s economic restrictions for dining out and gathering in public places. The states that are more dependent on tourism and the states that have been more restrictive are suffering the deepest jobs deficit.
On the bright side, 280,000 leisure and hospitality jobs were recovered in March alone, an indicator of states reopening and recovering. Indeed, the lion’s share of March leisure and hospitality jobs gains went to the states that had the most stringent economic lockdowns through the pandemic, and thus had the most jobs to recover. California regained 108,000 jobs on the month, Michigan regained 54,400, Illinois regained 31,800, and New York regained 12,500.
Despite a strong March jobs recovery, the states that enacted the most aggressive economic lockdowns still lag in leisure and hospitality jobs recovery. Hawaii has the worst jobs performance over the pandemic period, with 37 percent fewer leisure and hospitality jobs compared to January 2020. This is understandable not only as a matter of policy, but also because Hawaii is dependent on interstate and international tourism traffic that ground to a halt during the pandemic. Nevada’s dependence on interstate and international tourism similarly explains the state’s loss of 29.8 percent of leisure and hospitality jobs since January 2020.
On the other hand, the depth of job losses in New York (-33.5%), California (-31.5%), Massachusetts (-28.3%), Illinois (-27.3%) and Oregon (-24.6%) are more likely attributable to state and local lockdown policies. Indeed, these states all underperform Florida (-21.3%) despite the fact that Florida is far more dependent on interstate and international travelers for its leisure and hospitality sector. Meanwhile, the states with the shallowest job losses tend to be the ones that enacted lighter economic restrictions and have less tourism dependence.
Each state’s overall jobs recovery is highly connected to its job losses in leisure and hospitality. Idaho has the smallest remaining jobs loss in the leisure and hospitality sector, and is also the best state for overall jobs recovery. On the other hand, the five worst states for overall jobs recovery (Hawaii, Nevada, New York, California, and Vermont) are also the five worst states for recovery of leisure and hospitality jobs.
The leisure and hospitality sector accounts for nearly half of remaining job losses and is the area where most rapid recovery gains can be made. But that doesn’t mean states should create benefits for the leisure and hospitality sector at the expense of other parts of the economy. Indeed, broad state economic recoveries will be necessary to employ displaced workers from the leisure and hospitality sector. Emergency changes that occurred during the pandemic will likely result in long-term economic shifts. That might mean fewer leisure and hospitality jobs than pre-pandemic trends indicated. Investment dollars and labor talent should migrate to its most productive uses as the economy continues to restructure.
Bars, restaurants, and entertainment venues most acutely need what the entire economy needs: a return to normalcy coupled with pro-growth economic policies. States should prioritize reopening as the weather warms up and vaccination rates climb. They should also encourage a broader recovery with policies that cultivate investment, growth, and jobs gains across industries.
