U.S. Economy Added 49,000 Jobs in January, Restaurants Shed 19,400

January was a somewhat positive month on the unemployment front. The U.S. economy added 49,000 jobs, according to the U.S. Bureau of Labor Statistics (BLS), bringing the unemployment rate down 0.4 percentage points to 6.3%. The jobless rate is also much lower than it was back in April 2020, when it peaked at 14.7%.

But while things may have improved in the labor force on the whole in January, restaurants suffered yet another setback. In fact, the restaurant industry lost 19,400 jobs last month, which underscores how much dining establishments need additional aid.

Restaurant jobs keep disappearing

January was the third straight month of job losses for restaurants as reported by the Federal Reserve Bank of St. Louis. In fact, dining establishments have shed an estimated 2.37 million jobs in the course of the pandemic, according to the BLS, and if they don't receive additional aid, that figure could climb.

In January, the unemployment rate among restaurant workers was 14.4%. That's more than double the general jobless rate. And while that constituted an improvement from December, it's clear that the industry is still in trouble.

When will things turn around for restaurants?

There are a number of factors at play that could save restaurants. First, some states are easing capacity restrictions at dining establishments, thereby allowing more guests to visit. Furthermore, outdoor dining may soon become a more viable option as winter clears out and warmer weather makes the idea of eating outside more palatable.

Additionally, the rollout of coronavirus vaccines could lead to lower COVID-19 cases and fewer restrictions over the next six months. While the vast majority of Americans have not yet received a vaccine, as more candidates receive Food and Drug Administration emergency use authorization and production ramps up for formulas that are already in circulation, things will hopefully start to improve. And once that point arrives, eateries may be able to more fully open their dining rooms.

Aid is also available

Though restaurants are clearly still bleeding jobs, the good news is that there's aid available to them right now in the form of the Paycheck Protection Program (PPP). Restaurants with 300 or fewer employees that exhausted their initial PPP loans and suffered at least a 25% loss in revenue in any quarter of 2020 are eligible for a second-draw loan worth up to 3.5 times their monthly payroll costs, up to a maximum loan of $2 million. (It's worth noting that most other small businesses are limited to loans worth up to 2.5 times their monthly payroll costs.)

Additionally, as part of President Biden's $1.9 trillion coronavirus relief proposal, restaurants may be eligible for grants worth up to $10 million apiece. All told, the relief package is said to include a total of $25 billion for restaurants, though the details of those grants are still forthcoming.

PPP loans have their limitations for restaurants -- namely, it's difficult for restaurants to qualify for forgiveness because they don't tend to spend a lot of money on payroll. To have a PPP loan wiped out, 60% of its proceeds must be used for payroll purposes. Furthermore, not having extensive payroll needs means restaurants can only qualify for limited PPP funds in the first place. The $25 billion grant program would therefore do a much better job of providing targeted aid.

Can restaurants hang on?

Though the restaurant industry lost a lot of jobs in January, there's reason to believe things will get better soon. The question, however, is can restaurants hang in there long enough to ride out the current storm, or will countless more eateries permanently close their doors before the situation improves?