Tourism is beginning to pick up across the country, as our population continues to get vaccinated and governments ease coronavirus restrictions. In Miami, this combination is helping to fill restaurants and reservation books again. All over the city, restaurants are seeing the increased activity and patronage, most likely coming from pent-up enthusiasm to dine out; to be “normal.” It seems as if the days of limited customers in the dining room, and scouring to find alternate revenue streams, are behind us.
And, yet, another problem emerges. A nationwide labor shortage is severely affecting the nation’s recovery from the pandemic, specifically the hospitality industry. The U.S. unemployment rate remains elevated at 6.1 percent, but even as dining establishments aggressively hire workers, reports suggest they are having trouble attracting anywhere near enough staff. In April, Chipotle Mexican Grill began offering free college tuition for agriculture science, culinary arts, and 75 business and technology degrees to workers who stay on past four months. Other restaurants are luring potential workers with $2,000 signing bonuses, while a Florida McDonald’s offers $50 to applicants just to show up to an interview.
This problem was underscored by the release of the monthly labor statistics, which found that 266,000 jobs were created in April, far short of the roughly million new jobs that estimates had predicted. Some analysts blamed an economic recovery that isn’t as strong as it seems, but others have blamed powerful forces such as ongoing health fears and robust unemployment insurance for keeping people from seeking jobs in the service sector.
Florida Restaurant and Lodging Association (FRLA) CEO Carol Dover brought the hospitality labor shortage to the forefront of everyone’s minds during a recent Senate travel and tourism subcommittee hearing, asserting that Florida hotels and restaurants are "desperate for workers."
“Despite our ability in Florida to operate at 100% capacity, many are unable to because of a lack of staff. Simply put, we are competing with state and federal unemployment benefits. At the beginning of the pandemic when there were no jobs, this unemployment was critical for our workers who were furloughed or laid off, but now, we have the jobs, but many are unwilling to go back to work when they can obtain similar pay while at home.”
In the five years prior to COVID, nearly 300 new hotels and more than 9,500 new restaurants opened. Florida was on track to continue to set records. Pre-COVID, the state had a nearly $112 billion industry with more than 1.5 million employees.
At the onset of the pandemic, more than 934,000 of our 1.5 million employees were almost immediately furloughed or let go. Businesses including restaurants and bars were shut down, air travel stopped, and business conferences and large events were canceled. For many unemployed restaurant workers, it was a frightening and uncertain time. Several filed for unemployment, which included an extra $300 to $600 pandemic boost. The stimulus checks on top of that rivaled their salaries at restaurants, which can range from $8.65 per hour for a tipped worker to about $14 per hour for a line cook.
For many workers, however, the unexpected downtime may have reordered priorities about what matters, with this being the first time in a long time they could spend dinner time with family or exercise regularly. More importantly, they have begun asking themselves, “If this industry can deteriorate overnight and leave everyone unemployed, is this really stable enough to go back to?”
Another way to look at this is that there is a great reassessment going on in the U.S. economy, on various levels. At the most basic level, people remain cautious about returning to work until they are fully vaccinated, and their children are back in school and daycare full time. For instance, all the job gains in April went to men. The number of women employed or looking for work fell by 64,000, a reminder that child-care issues are still in play. There is also mounting evidence that many people are interested in changing careers and lifestyles from what they had prior to the pandemic. COVID-19 has had drastic psychological effects on workers, and people are reconsidering what they want to do and how they want to work, whether in an office setting, at home, or some combination.
In a recent interview with The Washington Post, Ariete Owner Chef Michael Beltran detailed how “people feel burned or burned out. Experiencing this made people more aware of what they were missing out on. This gave them a kick in the [rear end] to do something different, to find their real life.”
A Pew Research Center survey this year found that 66 percent of the unemployed had “seriously considered” changing their field of work, a far greater percentage than during the Great Recession. People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example. Or they want a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road.
The labor shortage could increase as governments ease pandemic regulations, especially in places like Miami, which experienced a large spring break uptick. The Miami bureau’s recovery index, responsible for tracking volume of air travel, hotel rooms sold, and reservations through Open Table denotes that restaurant reservations are nearly 28 percent higher now than 2019 pre-pandemic levels when the industry was thriving.
Advocates for the worker and labor market state that pay increases could be the solution for Miami’s, and other cities’, hospitality labor crisis. A report released on May 5th by the University of California at Berkeley Food Labor Research Center and the labor nonprofit One Fair Wage, describes the problem not as a labor shortage but as a wage shortage, saying restaurants should just pay workers more. But restaurant owners contend that they can’t afford to increase wages, as their margins are already narrow, often 3-5 percent.
The industry expectation remains that hiring will pick up this summer as the U.S. economy fully reopens and more people get vaccinated. However, the past year has deeply changed the economy and what many Americans want in their working life. This big reassessment is going to take a while to sort out and it could continue to pop up in surprising ways.
If you're a hospitality consultant or restaurant, nightclub, or bar owner, and in need of legal assistance, schedule a call with our team by clicking here.