Restaurant workforce demographics are shifting

The teen labor force participation rate declined sharply in recent years, a development that directly impacted the restaurant workforce.  Although restaurants are still the economy’s largest employer of teenagers, the shrinking teen labor pool has led many restaurant operators to look to alternative age cohorts to fill their staffing needs, according to the NRA’s chief economist Bruce Grindy.  His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.

The Great Recession and its aftermath had a significant impact on the U.S. labor force. The labor force participation rate fell to a 37-year low, with many people who lost jobs deciding not to return to the workforce. Contributing to this decline was the retirement of baby boomers, as well as a growing proportion of teenagers choosing to remain on the sidelines.

As the nation’s second largest private sector employer, the restaurant industry was directly impacted by these shifting labor demographics in recent years. Of significant note for the restaurant industry was the sharp decline in the teenage labor pool.

At its peak in the late 1970s, roughly 58 percent of 16-to-19-year-olds were in the labor force. This participation rate remained above 50 percent until 2001, when it started trending downward. The Great Recession exacerbated this decline, with the teen labor force participation rate plunging from 41.3 percent in 2007 to just 34.0 percent in 2014 – a record low.

The net effect was a decline of 1.4 million teenagers in the labor force between 2007 and 2014, a development that was reflected in the restaurant workforce. In 2007, 16-to-19-year-olds represented 20.9 percent of the restaurant workforce. By 2014, these teens made up only 16.6 percent of restaurant employees. 

To be sure, the restaurant industry is still the economy’s largest employer of teenagers, providing jobs for 1.5 million individuals between the ages of 16 and 19. Put another way, one-third of all working teenagers in the U.S. are employed in a restaurant. However, the shrinking teen labor pool has led many restaurant operators to look to alternative age cohorts to fill their staffing needs.

With teen representation in the restaurant workforce declining, a majority of the new restaurant jobs went to millennials in recent years. The share of restaurant jobs held by 20-to-24-year-olds rose from 21.4 percent in 2007 to 24.2 percent in 2014, while 25-to-34-year-olds also took on a larger role in the restaurant workforce.

Although older adults still make up a relatively small proportion of the restaurant workforce, they were the fastest growing demographic group in recent years. In fact, the number of adults aged 55 or older working in the restaurant industry jumped 38 percent between 2007 and 2014, an increase of 218,000 individuals. This trend is expected to continue in the years ahead, as older adults make up a larger share of the U.S. labor force.