The COVID-19-hammered hospitality industry will have to keep waiting federal help. Politics are to blame. A rush by Republicans and President Donald Trump to fill ex-Justice Ruth Bader Ginsburg’s Supreme Court seat will almost certainly delay further fiscal stimulus — the type of aid designed to prevent thousands of restaurants from closing and keep millions of ex-staffers out of poverty. In fact, any assistance might not arrive until after the election, White House senior advisor Jared Kushner recently told CNBC. This political reality is a particularly tough break for New York City venues, especially as new economic and health policy developments foretell a punishing fall and winter to come.
Here’s the TL;DR: Local food service hiring slowed dramatically in August, a setback for staffers scraping by on bare-bones unemployment benefits. Also: More and more restaurants can’t pay rent; consumer spending is poised for further slowdowns; and even though the return of indoor dining will help — if it doesn’t lead to more infections — vaccine prospects don’t bode well for lifting dining restrictions anytime soon.
This is precisely the type of environment where one would expect federal aid to ease the pain, be it through enhanced jobless aid, revenue replacement, or another round of Paycheck Protection loans. None of that assistance appears imminent now, especially as Congress shifts its pre-election focus toward the historic battle over filling the Supreme Court seat left vacant by the death of Justice Ginsburg last Friday.
Also worth noting is that while chief White House economist Larry Kudlow called for a deal on restaurant and small business aid this week, he added that the U.S. is in a “self-sustaining, strong v-shaped recovery” that’s not “contingent” on another relief package. Kudlow’s statements couldn’t be more divorced from reality, especially as the country continues to see a marked downturn in jobs growth — and as the virus continues to infect around 40,000 new people every day.
On the local level in New York City, recent developments on economic and public health fronts paint an even dimmer picture for restaurant workers and owners.
Local hiring has dramatically slowed in food services
Bars and restaurants added the fewest new jobs last month since the pandemic began, dropping to a sluggish 8.9 percent growth rate in August, down from the 20 percent range in June and July, according to new state data.
That deceleration in hiring means that any of the city’s 150,000 ex-hospitality staffers — roughly half the industry — will have a much tougher time finding a job. Without better unemployment assistance, those hard-working folks will risk bankruptcy, increased debt loads, food insecurity, and threatened evictions down the line. Could indoor dining help with this situation. Yes, but…
Indoor dining will only marginally help restaurants and workers
As New York’s outdoor dining program loses a bit of its cachet as the weather turns cooler, more will turn to indoor dining, which is inherently risky from a disease transmission perspective, per Centers for Disease Control and Prevention guidelines. But here, let’s look at the economics of it: Indoor dining begins at 25 percent capacity next week, which means a restaurant with 36 seats will only be able to accommodate nine customers at a time. Such limited service won’t translate into big gains in either revenues or hiring. Throughout the rest of the state, where indoor dining at half-capacity has been in effect for over two months, the industry is still only at about 72 percent of pre-pandemic employment, according to Eater estimates.
If the restaurant community across the state still suffers from Depression-era jobless rates, things will be much worse in the city where capacity is even lower, given that many folks are still working from home in the suburbs, and because new HVAC requirements for restaurants might be crushingly expensive. Indoor dining, in other words, is far from a panacea; in fact, it could be just the opposite if it precedes another uptick in infections and further layoffs. And that’s a big problem because…
Trump’s enhanced jobless aid is too limited in scope and funding
Over 1 million New York State residents were unemployed in August. New York City’s jobless rate is improving at a steady clip, but it still remains at 16.3 percent, nearly double the national rate, with Bronx unemployment at 21 percent, the state labor department announced yesterday. For these throngs of jobless folks, unemployment means subsisting on austere state benefits that often pay less than minimum wage of $15/hour.
Now there is some good news here: Many of those workers started receiving a $300 weekly supplement as part of President Donald Trump’s Lost Wages Assistance program. That means a jobless cook earning the city average salary of $35,050 would end up earning the hourly equivalent of…