COMP NEWS – The service industry has been reeling since the onset of the COVID-19 pandemic. Now, three years on, restaurants, bars, and hotels still can’t find enough workers. The reason? They’ve all found better jobs with higher pay.

Nearly three years since the coronavirus pandemic upended the labor market, restaurants, bars, hotels and casinos remain short-staffed, with nearly 2 million unfilled openings. The leisure and hospitality industry, which before the pandemic accounted for much of the country’s job growth, is still short roughly 500,000 employees from 2020 levels, even as many other sectors have recovered.

But these workers didn’t disappear. A lot of them, like McGrath, who were laid off early in the pandemic, moved to behind-the-scenes office work where they are more likely to have increased flexibility, stability and often better pay.

Employment in professional and business services — a catchall category that includes office jobs in accounting, engineering, law and other white-collar firms — has soared by 1.4 million during the pandemic. And tens of thousands of additional people are working in finance, construction, and transportation and warehousing.

Restaurant workers have been able to move into other industries in part due to the high death toll the country has experienced in the past three years. Those openings have been filled by workers moving away from the service industry.

These migrations have been possible in part because so many workers have left the labor force entirely. An estimated 2.5 million people have died, retired or otherwise dropped out since 2020. Americans older than 55, in particular, stopped working at heightened rates during the pandemic because of covid-related health risks. Plus, rapid run-ups in home values and stock prices made it financially viable for scores of older Americansto retire. Those extra vacancies in the job market, researchers have found, created room for people in the service industry to move into new lines of work.

As a result, workers are “missing” from certain service jobs — often the ones most visible to the public — slinging drinks, steaming lattes, waiting tables, cleaning hotel rooms or caring for babies.

“There’s been a shift away from the sectors where we have the most person-to-person contact,” said Nick Bunker, economic research director at the jobs site Indeed. “It feels like no one’s working, even though we can tell from government statistics that they are.”

Additionally, the mass migration of food service workers has contributed to the economy’s broader economic challenges.

The movement of workers away from hospitality jobs is playing a role in the economy’s broader inflationary problems. Pressure to attract workers has driven up wages in the industry — by 23 percent in the past three years, more than in any other sector — complicating the Federal Reserve’s task of containing inflation. Fed Chair Jerome H. Powell this week flagged service-sector inflation, as a result of higher wages, which are compounded by costlier food and gas, as a particular concern for the central bank.

“Clearly labor is important for restaurants, but so are food prices,” Powell said in a Wednesday news conference following the Fed’s latest interest rate increase. “There are lots of things in that mix that will drive inflation. I would say overall, though … you’re not going to have a sustainable return to 2 percent inflation in [the service] sector without a better balance in the labor market.”

The job sectorshift has been most pronounced in the United States, where 20 million Americans suddenly lost their jobs in early 2020. Unlike many European countries, which helped workers stay on the job by subsidizing their wages, the United States took a different approach, offering additional unemployment benefits once people were out of work. Employers cut 14 percent of the U.S. workforce in the first month of the pandemic, with many of those losses concentrated in restaurants, hotels, child-care centers and other service employers.

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