Benefits or bottleneck? US restaurants struggle to hire workers | Business and Economy News

Eva Johannesdottir has been through six kitchen workers since she reopened her restaurant The Cliff in May last year. Each time, she invested time and money to train them, but they could not meet the demands of serving busy brunch and orders at the small cafe in Jersey City, New Jersey, in the United States.

“The biggest challenge of running a business right now is getting help,” Johannesdottir told Al Jazeera. “One of the main reasons I can’t open the business more than three days a week is because I just can’t find workers.”

Her problem is not unique. As capacity constraints on restaurants are lifted and Americans enjoy their trained desire to eat out, many businesses have ‘help’ signs that collect dust in their windows.

According to the U.S. Bureau of Labor Statistics, restaurants were one of the businesses hardest hit during the coronavirus pandemic and ended 2020 with about 3.7 million fewer jobs.

But as vaccinations increased and restrictions lifted, the demand for restaurant workers came back roaring: there were 1.2 million leisure and hospitality posts in March, but many of the posts are not being filled.

Like many other restaurant owners in the United States, Eva Johannesdottir has struggled to hire workers as the demand for dining increases after a difficult 2020 [Courtesy: Eva Johannesdottir]

Staff levels remain 14 percent below pre-pandemic levels, found the National Restaurant Association. In an April survey, 84 percent of restaurants said their staffing levels were lower than they would normally be without COVID-19, and nearly half of them work with staffing levels more than 20 percent lower than normal.

Restaurants eager to increase their sales after a devastating 2020 are limited by the lack of workers – and they pay the price.

It can cost nearly $ 6,000 an employee per hour, a study found by restaurant platform Toast, and it’s in an economy when every other restaurant is not also looking for servers, bartenders, cooks, dishwashers and staff in the house.

According to experts, there are a number of factors that underlie the shortage of staff, from bottlenecks and workers not getting child care, to people changing careers. But one factor in particular has become a political lightning bolt – the federal weekly supplement of $ 300 a week for state unemployment benefits, which some say serves as a deterrent to looking for work.

“A lot of people like, well, I’m just going to enjoy the summer, spend time with my family, keep gathering and then go back to work in September,” Johannesdottir said.

Benefits debate

In New Jersey, the state’s unemployment benefit is $ 731 a week. Add the $ 300 federal supplement, which is $ 1,031 per week. By comparison, a full-time employee with a minimum wage of $ 12 per hour earns $ 480 per week.

Some of Johannesdottir’s employees at The Cliff are hourly and others are paid, with the lowest wage starting at $ 16 per hour. However, she cannot afford the improved unemployment benefits – especially as food prices have skyrocketed.

“The margins are so small, especially for a place like mine that does not have a liquor license,” Johannesdottir said. “If I paid everyone at the same or higher level, I do not think we would survive.”

According to the U.S. Bureau of Labor Statistics, there were 1.2 million jobs for recreation and hospitality in March, but many of these positions are not being filled. [File: Mary Altaffer/AP Photo]

Twenty-five states have announced plans to withdraw from the federal Unemployment Benefit Program, which includes the $ 300 weekly supplement, all led by Republican governors.

But many experts argue that it is an oversimplification to say that higher unemployment benefits are the only reason restaurant owners are currently struggling to hire.

Ioana Marinescu is an assistant professor at the University of Pennsylvania and a research fellow of the faculty at the National Bureau of Economic Research.

Marinescu said her research showed that while unemployment benefits could reduce the number of applications and make people more discerning, “the biggest cause of the problems is simply the congestion in the labor market – everyone is trying to hire at the same time.”

And because of the unique circumstances of the pandemic, renting traffic jams is not linked to an equal increase in unemployment, she says.

Benefits are a ‘double-edged sword’, Marinescu explained, noting that the existence of people is protected so that they could spend money on businesses such as restaurants in the first place.

Childcare Challenges

Summer holidays for school children in the US usually start in June, and many schools across the country are still engaged in distance learning or hybrid models when they are on their way to vacation.

While unemployment benefits have been at the heart of many theories as to why workers do not rush back, a strong argument can be made that the cost of childcare is just as important, if not more so, in limiting labor supply, ‘Bob Schwartz, a Oxford Economics senior economist wrote in a note last week (PDF).

Continuing education at a distance or hybrid and the high cost of child care are the reason why some Americans are not going back to work [File: John Minchillo/AP Photo]

Schwartz points out that “price increases for day care and pre-school schools in the year before the pandemic were more than 30 percent higher than the core inflation rate.”

Because the cost of childcare has risen faster than the cost of many other goods and services, “there is no reason to believe that it will not prevent lower paid women from returning to the workforce this time,” he added.

Johannesdottir believes that the childcare crisis – combined with the federal supplement – is a major problem.

“If there is a restaurant worker who gets unemployment plus supplemental income and stays at home with the children, there is absolutely no reason for them to go back to work,” she said.

She and her husband made their own child care offerings 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 go on to school in person.

Tough summer

Johannesdottir currently works with about half of the staff she needs, but hopes it will become easier with the autumn when the supplementary unemployment benefits end and children return to personal schools and child care centers.

Many restaurant owners are waiting to see if interest in their jobs returns after the $ 300 federal supplement for state unemployment expires in September [File: Wilfredo Lee/AP Photo]

“This summer is going to be long and difficult, but if I can get to September, I know things are going to change for the better,” she said.

The summer does not have to be difficult, said economist Marinescu. She suggests a “Stimulus of job loss” – it will enable workers to continue to raise the $ 300 federal supplement until the program ends in September, even if they return to work ahead of time, which will increase the boost while they have a safety net offers.

The data shows that ‘most people take jobs before the benefits expire’, she said. But she does expect to see an increase in job applications before the deadline. For those who are waiting, however, it is going to be more difficult to get a job because you will have the opposite phenomenon ‘of many applicants for the same roles, she explained.

As the demand for restaurants finds a balance with the supply of labor, Johannesdottir hopes that her customers will give her staff some mercy.

“We’re coming out of this pandemic,” she said, “but we can not really expect everyone to be just where we left off.”

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