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Industry News and Information

Out of the Frying Pan and Past the Fire

Faith Rothberg
Isaac Rothberg-Levin (Guest Author)
May 12, 2022


Restaurant workers are leaving the industry and unemployed workers are reluctant to take their jobs. It’s no mystery why.

Uncompetitive wages

Some restaurants have raised their wages quite dramatically and made substantial changes to working conditions like offering employees consistent work schedules. In doing so, these restaurants make themselves competitive with industries whose quit rates are dramatically lower. Quit rates have been more than 3x higher in restaurants and hotels than in any other industry, with the exception of retail. Most restaurants, however, continue to struggle to stay properly staffed, and at least for the moment their staff shortages are showing no sign of abating.

Many restaurants are finding that offering wages competitive with their industry isn’t doing the trick. Labor prices may have risen significantly in the last year, but they haven’t come close to matching the industries so many restaurant workers are fleeing to. To effectively tackle the labor shortage in bars and restaurants, we need to have a proper answer to the question – Why are restaurant workers fleeing the industry? And where are they going? 

Cross-industry competition

Widespread job vacancies across the economy mean that restaurant hiring managers are now being forced to compete not just with their counterparts at other area restaurants, but also with their counterparts in other, similar or higher-paying industries. Some restaurant workers are moving to businesses that offer a calmer working environment, more predictable schedules, or less intimidating customer facing work, like hotels, airports, hair salons and barber shops, coffee shops, bakeries, butcher shops, and certain grocery stores.

Other restaurant workers have left hospitality and customer-facing work entirely, opting for careers they perceive to be more sustainable in digital programming, warehousing, manufacturing, and low barrier blue collar trades such as auto repair and solar installation. The labor shortage has lowered barriers to entry into these industries to be much more on par with getting a job at a restaurant. You don’t need a degree, a trade school certification, or a full resume, you just need to be a warm body who will show up on time every day and do the (often difficult) work. And wages in some of these industries sit at substantially higher levels than those of restaurants.This new ease with which restaurant workers can acquire jobs in better paying industries appears to be putting downward pressure on the labor supply for food service workers.

Debilitating work

Anyone who has worked in a restaurant is familiar with how demanding the work tends to be. Grueling is a word that comes up quite frequently. It’s common for restaurant employees to be scheduled for 10 hour shifts, for “double shift[s]” (aka a 10-14 hour shift with a long unpaid break in the middle), and for working until the end of the night only to need to return first thing in the morning. These kinds of scheduling practices which place a great burden on employees tend to be significantly more pervasive and more severe in the restaurant industry than in almost all others. Restaurant workers are telling us exactly what they’re doing and why. They are finding jobs which allow them to be home for dinner with their children, or allow them to get adequate sleep, or to take their kids to school in the morning, or to finally be able to spend time with friends at a reasonable hour. And those who aren’t, are often asking their restaurants to become competitive with the businesses their coworkers have already left for, whether in the form of predictable schedules or tip credit decreases or other things.

No end in sight

If the current labor shortage has remade the American labor market so dramatically, it follows that we could be in for more dramatic changes at some point in the short to medium term future, especially as the Fed looks to adjust interest rates. When that occurs and what it looks like is another question, and for the moment the outlook is anything but clear. But there is no monetary fix for the labor shortage on offer which wouldn’t mean a potential recession, so this is not something to look forward to as a solution.

Compete, or bust

That leaves hiring managers with the task of filling jobs whose value to workers has become uncompetitive. Significant wage hikes in the past year or not, food service remains one of the lowest paid sectors in the economy while also being one of its most demanding. Restaurants are in an extremely competitive buyers’ market right now, and as such, may need to increase the value on offer to potential employees over where it currently stands. Hiring managers may have success if they are willing and able to become more competitive with the outside businesses and industries which many potential employees currently prefer.

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