- Workers in leisure, hospitality, and retail have been particularly hard hit during the pandemic.
- A New York Fed analysis finds only 4% of workers will be rehired by currently closed small businesses.
- And just 3% of the service businesses currently closed are likely to reopen.
- See more stories on Insider’s business page.
Throughout the pandemic, service workers have had it tough. The ones that didn’t have to contend with massive layoffs have had to safely navigate customer-facing roles, while their industry has been radically disrupted.
And evidence is showing that the service workers who were laid off stand a slim chance of getting their old jobs back.
A new analysis from the New York Federal Reserve’s Liberty Street Economics looks at data from about 100,000 leisure, retail, and hospitality businesses – mostly small ones – and delves into the ones that have remained closed.
Of businesses active before the pandemic, 35% remain closed. The longer a business stays shuttered, the more likely it is it will never reopen, according to the analysis: For every extra week a business stays closed, the probability of reopening drops by 2%. Most of those businesses have been closed since the pandemic first hit.
Bad news for workers
For people working at those currently shuttered businesses, continued closures may bring bad employment news. The analysis found that just about 4% of workers laid off from those businesses will be rehired by them.
The longer the closure, the lower the chance of rehiring: For every extra week they remain shuttered, the number of workers rehired for reopening drops by 5%. Of course, that all hinges on if their employers do end up reopening. The New York Fed anticipates that just 3% of the closed businesses will reopen, and those that do will hire back 35% of their workers over the course of four weeks.
Service workers have been hard hit throughout the pandemic
To be sure, employment in leisure, hospitality, and retail has seen a major rebound as the economy has reopened.
In March, nonfarm payrolls added 916,000 jobs, and service jobs accounted for a third of those gains. Small businesses are also increasingly reopening, especially as vaccinations around the country ramp up and restrictions are lifted.
One hindrance is the so-called labor shortage, where employers are having trouble filling jobs. That could be for a few reasons, according to Insider’s Ayelet Sheffey, including COVID-19 health concerns and inability to access affordable childcare. A study from advocacy group One Fair Wage found that of the workers who never left service jobs, female workers experienced more harassment and lower tips during the pandemic.
A February McKinsey report separately found that food service jobs are in general decline over the long term, and over half of workers in low-wage jobs will have to find higher-paying positions post-pandemic.
“Last year, we started a relief fund for service workers; 240,000 workers applied for relief,” Saru Jayaraman, the president of One Fair Wage, previously told Insider. “And I can’t tell you the number of women waitresses who wrote to us and said, ‘I can no longer feed my children. The lines are too long at the food banks. I am now resorting to stealing food because I have no choice.'”