A big hit for leisure and hospitality

By the end of September, a little more than 1 of every 4 leisure and hospitality jobs had disappeared – a huge improvement from the 60% drop in April. But with so many fewer jobs, earnings from bar, hotel and restaurant workers dropped by 9%, or $34 million. That’s more than four times the region’s 2% drop in total wages during the summer quarter last year.

Pay is a factor, too. Because leisure and hospitality jobs pay much less than the average Buffalo Niagara job, their impact on the drop in total earnings has been much less severe than the steep losses in employment.

Because the remaining leisure and hospitality workers often received extra pay raises to stay on the job and likely worked longer hours, their average weekly wage, which reflects the hourly wage and the hours worked, shot up by $140 during the summer to almost $600 – a 31% increase.

For some of those frontline workers, that bonus pay has since disappeared, even as more jobs have returned. By the end of March, the employment shortfall had narrowed to 1 of every 5 leisure and hospitality jobs, which means the wage gap also has narrowed, though we don’t have the data to say by how much.

Average wages are rising fast

Another odd thing has happened during this recession. Overall wages are plunging as jobs disappear, but workers who have kept their jobs have been taking home much bigger paychecks – partly because they’re working more, and partly because many got raises to reward them for staying on the job while lockdowns were in effect.

And then there’s the pandemic itself.

Tempered optimism for rebound

With more than a quarter of all Erie County residents fully vaccinated and more than 2 of ever 5 having at least one shot, economists expect a surge of travel and dining out during the rest of spring and into the summer. That, and the impact of the massive federal stimulus program, should give a healthy jolt to the economy, said Fred Floss, a SUNY Buffalo State economist.

“It’s very likely that it will not only pull us out of the Covid recession, but also put us on a growth path from the original recession,” Floss said.

But Covid-19 cases are rising rapidly across the Buffalo Niagara region, and that could rattle consumers who are aching to travel and get out.

“It’s tempering some of that optimism,” said Julie Anna Golebiewski, a Canisius College economist. “The pandemic caused the recession, so it’s only logical to assume that the recovery is depending on the pandemic coming under control.”

Economy faces daunting challenge

While some of the hoped-for job gains could come quickly, the hole dug by the Covid-19 recession is so deep that it likely will take a long time to overcome the lingering impact of the swift and sudden downturn last spring.