The economy added 943,000 jobs last month, according to new U.S. Department of Labor data on Friday, the highest rate of growth in seven months and enough to bring the unemployment rate down a half a percentage point to 5.4%.
More than one out of every five of those new jobs came at a restaurant. The industry added 253,200 workers during the month—the largest gain since February—as operators increased pay and improved benefits in a bid to get more workers.
The industry now provides nearly 11.4 million jobs. That remains just less than 1 million short of where it was just before the pandemic in February of last year. But the industry has regained 5 million of the 6 million jobs it lost when restaurants were forced to close their dining rooms to stop the spread of the pandemic.
Restaurants have also added nearly 1.4 million jobs so far this year as more dining rooms were opened and people ventured out. The industry has also benefited from strong demand—industry same-store sales have increased for 19 straight weeks through July 25, according to Black Box Intelligence.
Several big restaurant chains, including McDonald’s, Starbucks, Texas Roadhouse and Applebee’s, are reporting strong sales so far this year, often up well over 2019 levels. Several private chains, including the sandwich giant Subway and the smoothie chain Tropical Smoothie, are also saying they’re generating strong sales this year.
That demand has also led to a hiring shortage, prompting a number of restaurant chains to take steps to recruit workers. Just this week Papa John’s said it and its franchisees would host 800 recruiting events in 60 markets across the country next week.
“The labor markets are tough everywhere,” Papa John’s CEO Rob Lynch told investors on Thursday. He noted that application flow and hiring picked up over the past two months as a number of states ended excess unemployment benefits. “But it is still a challenge.”
At Jack in the Box, the labor shortage has “impacted store hours and service levels,” CEO Darin Harris said this week.
Chains have increased pay and benefits in a bid to combat the shortage. Average hourly earnings for nonsupervisory workers throughout the economy rose 11 cents in July, according to the Labor Dept., suggesting that “recovery from the pandemic may have put upward pressure on wages.”