It's fair to say that the restaurant industry was among the hardest hit in the course of the pandemic. An estimated more than 10% of food establishments closed their doors on a permanent basis, and many are still in the process of trying to recover from the events of the past year.
But there's one thing that's hindering their recovery in a very big way: a lack of workers. And now, restaurants are going to extremes to entice new hires to come on board.
Going to extremes
When the pandemic first hit, the restaurant industry was quick to shed jobs, and when capacity limits were being upheld, that made sense. But now, those capacity limits are being lifted, and patrons are eager to dine out in person again.
There's just one problem -- restaurants don't have the staff they need to welcome diners back at full force.
So how did we go from widespread unemployment and desperation to a massive industry-wide labor shortage? Part of it could boil down to low wages and unemployment benefits.
Right now through early September, jobless workers on unemployment are entitled to a $300 weekly federal boost on top of their regular state benefit. Though 25 states have pulled the plug on that boost already, the rest are keeping it in place until its Labor Day expiration date.
Meanwhile, restaurants aren't exactly known for paying generous wages. Many restaurant workers routinely rely on tips just to stay afloat, so at this point, it makes more financial sense for those who are jobless to continue collecting benefits than to return to the food service industry and earn less money as a result of that effort.
Of course, come early September, restaurant job applications could boom. But we're not in September -- we're only in June, and after a brutal 2020, restaurants can't afford another two and a half months of sluggish revenue.
It's for this reason that some restaurants are upping the ante to draw in workers. Some are raising wages to entice employees back into the fold. Others, however, are employing a tactic that's most often associated with big-name financial firms and law offices -- they're offering hiring bonuses.
Now to be fair, most restaurants aren't handing out the same amount of money to sign on board as big-name companies dish out. But for restaurant workers, a $1,000 bonus, for example, could be enough of a draw to get back in the game.
A smart tactic
Though some people on unemployment may be staying out of work intentionally for as long as that weekly $300 boost remains in play, it's also not going to stick around forever. And seeing as how the jobless rate has improved a lot, the likelihood of that federal boost getting extended beyond early September is slim. As such, jobless restaurant workers know they'll eventually have to take a job somewhere, and if they're lured in with a pile of cash, everyone benefits.
Of course, the fact that restaurants are resorting to hiring bonuses could perhaps prompt them to rethink their wage policies. But now, frankly, may not be the time to expect that.
A lot of restaurants are still hurting from the impact of the pandemic, and many may not yet have the resources to increase employee wages. Right now, restaurants need to focus on staying alive -- something real estate investors need them to do so that local property values don't sink and commercial landlords don't grapple with widespread vacancies. But the fact that restaurant workers aren't exactly rushing to take jobs should inspire some type of wage reform -- even if that doesn't happen right away.