Benefits or bottleneck? American restaurants struggle to hire workers | Business and Economy News
Eva Johannesdottir has gone through six kitchen workers since reopening her restaurant The Cliff last May. Each time, she invested the time and money to train them, but they were unable to meet the demands of serving busy brunches and take out orders at the small cafe in Jersey City, New Jersey. in the USA.
“The biggest challenge in staying in business right now is finding help,” Johannesdottir told Al Jazeera. “One of the main reasons I can’t open the business more than three days a week right now is because I just can’t find workers.
His problem is not unique. As restaurant capacity limits are lifted and Americans relax their pent-up desire to dine out, many establishments have “help wanted” signs that collect dust in their windows.
Restaurants were among the hardest-hit businesses during the coronavirus pandemic and ended 2020 with around 3.7 million fewer jobs than at the start of the year, according to the US Bureau of Labor Statistics .
But as vaccinations have increased and restrictions have been lifted, demand for catering workers has returned with a vengeance: there were 1.2 million vacancies in leisure and hospitality in March, but many. of these jobs are not filled.
Staffing levels remain 14% below pre-pandemic levels, the National Restaurant Association found. In an April survey, 84% of restaurants said their headcount was lower than they would normally be without COVID-19, with nearly half of them operating with staffs more than 20% lower than they would normally be without COVID-19. normal.
Restaurants keen to increase sales after a devastating 2020 find themselves constrained by the lack of workers – and they are paying the price.
It can cost nearly $ 6,000 to find, select and train an hourly worker, according to a study by the restaurant platform Toast, and that’s in an economy where not all other restaurants are equally looking for waiters, bartenders, cooks, dishwashers and storefronts. House staff.
The staff shortage is due to a number of factors, experts say, ranging from bottlenecks and workers who cannot find childcare to people changing careers. But one factor, in particular, has become a political lightning rod – the $ 300 weekly federal top-up to state unemployment benefits, which some say discourages people from getting out and finding jobs.
“A lot of people are thinking, well, I’m just going to enjoy the summer, spend time with my family, continue to collect and then go back to work in September,” Johannesdottir said.
Discussion of the benefits
In New Jersey, state unemployment benefits reach $ 731 per week. Add the federal top up of $ 300, and that’s $ 1,031 a week. By comparison, a person working full-time at the state’s minimum wage of $ 12 an hour earns $ 480 per week.
Some of Johannesdottir’s employees at The Cliff are paid by the hour and others are salaried, with the lowest wages starting at $ 16 an hour. Still, she can’t afford to match the improved unemployment benefits – especially as food prices have skyrocketed.
“The margins are so small, especially for a place like mine that doesn’t have a liquor license,” Johannesdottir said. “If I put everyone on the same pay level or more, I don’t think we would survive. “
Twenty-five states have announced plans to withdraw from the federal unemployment benefit program, which includes the weekly top-up of $ 300, all led by Republican governors.
But many experts argue that it’s simplistic to say that higher unemployment benefits are the only reason restaurateurs are struggling to hire right now.
Ioana Marinescu is an assistant professor at the University of Pennsylvania and an academic researcher at the National Bureau of Economic Research.
Marinescu said his research shows that while unemployment benefits can reduce the number of claims and make people more demanding, “the main cause of the hardship is simply labor market congestion – everyone is trying to hire at the same time. time”.
And due to the unique circumstances of the pandemic, this hiring bottleneck “is not accompanied by a commensurate increase in unemployment,” she said.
The perks are a “double-edged sword,” Marinescu explained, noting that their very existence protected people’s incomes so that they had money to spend on businesses like restaurants in the first place.
Summer vacation for schoolchildren in the United States typically begins in June, and many schools across the country are still subject to distance or hybrid learning models as they head into the vacation.
While unemployment benefits have been at the center of many theories as to why workers don’t rush, “a strong argument can be made that the cost of child care is just as important, if not more, to restrict labor supply, “Bob Schwartz, senior economist at Oxford Economics, wrote in a note last week (PDF).
Schwartz points out that in the year leading up to the pandemic, “price increases for daycares and kindergartens were more than 30% above the base inflation rate.”
Because the cost of child care has risen faster than that of many other goods and services, “there is no reason to believe this will not happen again and prevent lower paid women from returning to work. the job market this time around, ”he added.
Johannesdottir believes the crisis in child care – combined with the federal supplement – is a major problem.
“If there is a restaurant worker who gets unemployment plus extra income and stays home with the kids, there is absolutely no reason for him to go back to work,” she said. .
She and her husband made their own sacrifices to keep their restaurant open. In July, they sent their two young children to Iceland to live with Johannesdottir’s mother so that they could continue going to school in person.
A difficult summer
Johannesdottir is currently working with about half the staff she needs, but hopes things will get easier by the fall, when additional unemployment benefits end and children return to schools and daycare in person. .
“This summer is going to be long and difficult, but if I can make it through September I know things will change for the better,” she said.
Summer doesn’t have to be harsh, economist Marinescu said. She proposes a “stimulus for job losers” – which would allow workers to continue to receive the federal top-up of $ 300 until the end of the program in September even if they return to work before that date, which would stimulate hiring while providing a safety net.
The data shows that “most people take a job before benefits expire,” she said. But she expects to see a spike in job applications just before the deadline. For those who wait, however, “it will be more difficult to find a job because you will have the opposite phenomenon” of many candidates for the same positions, she explained.
As the demand for restaurants balances with the supply of labor, Johannesdottir hopes his customers will give a little grace to his staff.
“We are coming out of this pandemic,” she said, “but we can’t really expect everyone to be where we left off before. “