Restaurants Are Dangling Vacation And Matching 401(k), But Many Workers Aren't Biting

Aug 6, 2021
Originally published on August 6, 2021 11:32 am

Updated August 6, 2021 at 8:56 AM ET

At the Wheat Penny Oven and Bar in Dayton, Ohio, demand for pizza and craft cocktails has never been stronger, but staffing shortages have temporarily forced the restaurant to close on Sundays and Mondays.

"Not everybody wanted to come back," says co-owner Liz Valenti. "People that had been in this industry for five, 10, 15 years, made the decision not to come back to hospitality. They've moved on to other areas."

Restaurants and bars have hired hundreds of thousands of cooks and servers in recent months to meet surging demand, but the industry as a whole is still short of workers.

At Wheat Penny, sales have topped pre-pandemic levels, but they would probably be higher still if Valenti could find enough workers to operate seven days a week.

"Customers, since the vaccination has kicked in, they've been much more eager to spend dollars, and we've benefited from that," Valenti says.

Factories, delivery services and construction crews are also clamoring for additional help to keep pace with booming demand from consumers.

The Labor Department reported Friday that U.S. employers added 943,000 jobs in July. That's up slightly from June, when revised figures show employers added 938,000 jobs. The unemployment rate fell to 5.4% in July, from 5.9% the month before.

Restaurants and bars accounted for a quarter of the jobs added last month. But employment in the broader hospitality industry is still about 1.7 million jobs short of its pre-pandemic level.

The report shows schools added 261,000 jobs in July, but that number may be exaggerated by seasonal adjustments. The pandemic has altered school hiring schedules this year.

Even though millions of Americans are still unemployed, businesses say they're having to search harder to find workers.

"We saw a huge increase in the number of job postings offering signing bonuses, and advertising that starting salaries were $15" an hour, says Julia Pollak, a labor economist with the job-search website ZipRecruiter.

Average hourly wages in the hospitality industry were 9.6% higher in July than they were a year ago. Some big public restaurant companies, such as The Cheesecake Factory and Chipotle, say they've been able to staff up successfully since raising wages, but many firms are still struggling.

Valenti has raised pay for her line cooks from $13 to $15 an hour, and she's also touting fringe benefits not usually associated with restaurants.

"There's paid vacation," she says. "There's health insurance that we underwrite. There's a 401(k) match. So we really are trying trying to get people to see that they have the capacity to earn a good living here as well as to have a good quality of life."

Some would-be employees are waiting for schools to reopen or for more people to get vaccinated before going back to work. And the surge of new coronavirus infections tied to the delta variant may cloud the economic outlook going forward.

"Some people might say, 'You know what? I'm just going to wait a couple of months before going back to work,' " Federal Reserve Chairman Jerome Powell told reporters last week. "It may be that the effect is to slow the economy down just for a period of months."

The worsening health outlook has prompted some companies to postpone their plans for a return to in-person workspaces. Amazon, for example, says office employees won't return to corporate campuses until early next year. That's a potential setback for nearby businesses that rely on office foot traffic.

"As people were returning to offices, they were of course returning to the restaurants and nail salons and dry cleaners around their offices," says Pollak "That was reviving employment in downtown. That may now be on pause for the next couple of months."

The jump in infections could also weigh on the travel and in-person entertainment industries, which were just beginning to find their footing.

At Valenti's restaurant in Ohio, servers have voluntarily started wearing masks again, just 10 days after shedding the face coverings. The restaurant is not asking customers to mask up yet, but that could change.

"Governor [Mike] DeWine has made it clear he is not going to make a mandate again," Valenti says. "So I think it's going to be on the shoulders of independent businesses to make that hard call. And it's unfortunate that it's going to be a young person at a host stand that is going to possibly have to ask someone to put a mask back on. That's a really unfortunate situation."

Most customers are understanding, Valenti says. But it adds yet one more potential difficulty for restaurants like hers: The prospect of having to deal with hostile customers who don't want to wear a mask will likely not make recruiting any easier.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

A MARTINEZ, HOST:

A lot of people are going back to work, but not as quickly as many employers would like. The Labor Department said this morning that U.S. employers added 943,000 jobs in July. That's up slightly from the month before, but overall employment is still about 5.7 million jobs short of where it was before the pandemic.

NPR's Scott Horsley joins us. Scott, I know you've been talking with a lot of employers. What are you hearing?

SCOTT HORSLEY, BYLINE: A, factories, delivery companies, construction firms - they've all been clamoring for additional workers to keep pace with increased demand. Once again last month, restaurants and bars led the way in hiring. They accounted for about a quarter of all the jobs that were added in July. The hospitality industry, though, is still down about 1.7 million workers. I spoke this week with Liz Valenti, who runs a couple of restaurants in Dayton, Ohio. She says sales there are better than ever.

LIZ VALENTI: Customers, since the vaccination has kicked in, they've been much more eager to spend dollars, and we've benefited from that.

HORSLEY: But even with that strong demand, Valenti is keeping her restaurants closed on Sundays and Mondays. She just doesn't have the staff to stay open seven days a week.

VALENTI: Not everybody wanted to come back to this industry. So people that have been in this industry for five, 10, 15 years made the decision not to come back to hospitality. They've moved on to other areas of career paths.

HORSLEY: Restaurant jobs are still relatively low-paid, but the wages have been coming up as employers try to compete for workers. Valenti's boosted pay for her line cooks from $13 to $15 an hour. She's also been touting fringe benefits that we don't often associate with the restaurant industry.

VALENTI: There's paid vacation. There's health insurance that we underwrite. There's a 401(k) match. So we really are trying to get people to see that they have the capacity to earn a good living here, as well as to have a good quality of life.

HORSLEY: Ordinarily, you wouldn't think workers have a lot of bargaining power when millions of people are unemployed, but that's what we're seeing. Julia Pollak, who's a labor economist with the job-search website ZipRecruiter, says a lot of businesses are finding they have to put more money on the table to recruit workers. In some cases, they're also having to hire people with less experience than they like.

JULIA POLLAK: For example, we saw a huge increase in the number of job postings offering signing bonuses and advertising that starting salaries were $15. And that should help some employers seal the deal.

HORSLEY: Sure enough, a couple of the big publicly traded restaurant companies, Chipotle and The Cheesecake Factory, say they have been able to staff up fairly successfully after raising their wages. At the same time, millions of workers are still on the sidelines. Many were expected to go back to work in September. That's when a lot of schools are supposed to reopen, spelling relief for working parents. It's also when pandemic unemployment benefits are set to expire in the states where they haven't already lapsed.

However, the new spike in coronavirus infections has thrown that timeline into question. Federal Reserve Chairman Jerome Powell says the rise of the delta variant could drag out the recovery in the job market.

(SOUNDBITE OF ARCHIVED RECORDING)

JEROME POWELL: Some people might say, you know what? I'm just going to wait a couple of months before going back to work. It may be that the effect is to slow the economy down just for a period of months.

HORSLEY: The worsening health outlook has also prompted some companies to postpone their plans for a return to in-person workspaces. ZipRecruiter's Pollak says that's a potential setback for neighboring businesses that rely on that office foot traffic.

POLLAK: As people were returning to offices, they were, of course, returning to the restaurants and nail salons and dry cleaners around their offices. And that was sort of reviving employment in downtowns. That may now be on pause for the next couple of months.

HORSLEY: Because of the delta variant, servers at Liz Valenti's restaurant in Ohio have chosen to start wearing masks again. They got to go mask-free for all of about 10 days this summer. So far, Valenti is not asking her customers to mask up, but she says that could change.

VALENTI: Governor DeWine has made it clear he is not going to make a mandate again. So I think it's going to be on the shoulders of independent businesses to make that hard call. And it's unfortunate that it's going to be a young person at a host stand that's going to possibly have to ask someone to put a mask back on. That's a really unfortunate situation.

HORSLEY: And, A, the prospect of having to deal with a few hostile customers who don't want to wear a mask is not going to make recruiting at restaurants any easier.

MARTINEZ: Scott, anything else stand out from this morning's report?

HORSLEY: Well, this is a strong report. Job growth is picking up steam. But a cautionary note - this reflects the job market as it was a few weeks ago, before the big spike in coronavirus infections. So, as always, the path of the recovery will depend a lot on what happens with the virus.

MARTINEZ: NPR's Scott Horsley - Scott, thanks.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.