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Home Publications Blogs Beat the Press Restaurant Employment Rises When the Labor Market Is Weak

Restaurant Employment Rises When the Labor Market Is Weak

Sunday, 07 April 2013 13:57

This simple point is shown nicely in a graph in Catherine Rampell's Economix blogpost. The point is simple. Restaurants always want to hire people at low pay and with few benefits. In a weak labor market they can. When we have periods of low unemployment, like the late 1990s and 2005-2007, workers have better options.

Comments (4)Add Comment
written by Last Mover, April 08, 2013 7:40
Doesn't make sense. The chart shows a steady increase of employment since 2001, tipping down just before that, so employment in eating and drinking places was increasing well before the crash.

Unless the crash resulted in more people eating out but downgrading to cheaper places and drinking more to dilute the loss.
written by skeptonomist, April 08, 2013 8:55
Last Mover is right; Rampell says there is a "striking pattern in the recovery", but the graph shows a steady growth of food service fraction since about 2000. It does NOT show an increase corresponding to the 2008 recession. In other words, assuming a steady growth in the restaurant business, employment therein has very closely paralleled the economy as a whole since 2001, directly contrary to what Rampell and Dean claim.

If the restaurant business has not grown steadily since 2000 as a share of the economy (not in absolute terms) there might be something to the claim, but that is not in evidence.

What is "striking" about this is the ability of people to see things in economic data that aren't there.
this is somewhat off-topic, but...
written by David M, April 08, 2013 10:10
I'd love to hear CEPR's take on this NEBR paper http://papers.nber.org/papers/w18901. I'm quite skeptical of most of the structural explanation of unemployment, but this one seems to make more sense, arguing that a decrease in demand for high-skill cognitive workers has depressed wages for lower skilled workers.
Some comparisons?
written by Jennifer, April 08, 2013 10:01
Agree with last mover, it begins a steady climb 2001-02, there is a notable steady increase from that point compared to the 1997-2000 period which is quite flat. I am wondering if you could see some similar graphs of middle-to-higher wage occupations over the same time period you might seen see different patterns. Probably not such a steady increase over the past few years but something flatter. Might that make the case better?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.