restaurant industry labor or wage shortages?

Photo by Kate Townsend on Unsplash

As the country steadily recovers from the pandemic and businesses reopen their doors, aggrieved restaurateurs have shifted their primary concern from temporary or permanent closures to understaffing burdens, labor costs, and hikes in the price of goods. Headline after headline in news media, albeit somewhat hyperbolically, direct attention to some of these struggles, such as, “Inside the Restaurant Industry’s Critical Labor Shortage” or “Help Wanted: Labor Crisis Plagues US Restaurant Industry.” What the content in these articles underscores is a debate as to whether U.S. restaurants are experiencing a labor shortage or a wage shortage.  Resolve on this matter depends on who one talks to. But, the reality lies somewhere in the middle, in that people both fear returning to unsafe work conditions and are not incentivized enough (monetarily or otherwise) to go back to work given the continuing COVID-19 conditions. Ultimately, longstanding systemic and nascent pandemic-specific inequalities in restaurant employment have led many food and beverage workers to press the pause button on job reentry, thereby highlighting underlying structural pitfalls embedded in both the restaurant industry and U.S. labor standards.    

inequality made visible during the COVID-19 pandemic

Although low wages and minimal benefits in restaurant industry jobs are well documented, restaurant labor shortages and understaffing are relatively new coronavirus-related phenomena.      In the very beginning of 2020, according to the National Restaurant Association, U.S. restaurants were thriving with 15.6 million people employed in them. Presently, there are 12.5 million restaurant workers in the United States, which is a figure down by 3.1 million workers due to the COVID-19 outbreak, workplace shutdowns, and social distancing measures. Though this loss of employees is directly tied to COVID-19, socioeconomic issues (e.g., job instability) in restaurants existed well before its onslaught. The problems associated with precarious work simply became more visible because of the pandemic, especially for historically vulnerable groups of people (e.g., women, mothers, and people of color). Prior to COVID-19, research told us that restaurant workers already lacked healthcare coverage from their jobs, had few to no paid sick days, labored through their illnesses, and were exposed to dangerous workplace conditions. After COVID-19 spread, study findings indicated that restaurant employees continued to confront these issues along with substantially reduced work hours and tips, inadequate COVID-19 safety protocols, an increase in harassment from customers because of attempts to enforce mask wearing as well as other social distancing measures, and high rates of sexual harassment from customers, such as comments like: “Take off your mask so I can stick my tongue down your throat.” In sum, restaurant workers experienced workplace inequalities long before the COVID-19 pandemic, and the labor shortages we are seeing now – at least partially – relate to those extant conditions.            

not enough “good jobs” in the restaurant industry

The scholarly literature has extensively written about the decline of “good jobs” and growth of “bad jobs in the United States, where good jobs are ones that provide high wages or salaries, fringe benefits, and stability, and bad jobs are ones that do not. In terms of jobs in the restaurant industry, wages are of particular interest when talking about labor shortages and incentivizing employees to return to work. Empirically, the U.S. restaurant industry has had an extremely large concentration of workers paid at or below the federal minimum wage.      Although the federal minimum wage is $7.25 an hour (effective in 2009), as of 1991, tipped employees are only required to be paid the federal tipped minimum wage of $2.13 an hour, which the states have discretion over (since 1938).  For instance, a tipped worker in Tennessee need only be paid $2.13 an hour, while one in New Jersey must make $4.13, one in Colorado is required to earn $9.30, and one in Washington needs to be given $13.69. California employers with 26 or more workers pay the highest tipped minimum wage at $14.00 an hour. Notably, none of these tipped minimum (subminimum) wages keep up with inflation or allow for a living wage – one that provides an adequate standard of living for food, shelter and other necessities, such as childcare or healthcare. Currently, states are attempting to adopt legislation to boost minimum wages but have been met with pushback. Not only are low wages an anathema to restaurant employees who are deciding whether to return to work, the lack of fringe benefits, job      security and workplace safety measures in restaurant jobs weigh heavy on their minds.                     

so, what now?

Improving restaurant longevity as well as employee numbers and retention during uncertain health – and socioeconomic – related circumstances is fraught and not an easy task or without pecuniary challenges. In order to incentivize workers to return to (or to enter for the first time) restaurant jobs, labor practices need to be addressed not only by restaurant owners and managers but also by the national legislature. Long-term structural reforms could make returning to work worth the personal risks for employees, thus aiming to reduce labor and wage shortages. To begin, restaurateurs should steadily pursue a balance between positive workplace norms for employees and profitability. For example, major progress can be made in terms of: (1) outlining and enforcing workplace safety protocols and customer-worker harassment prevention, (2) gradual increases in employee wages, full-time hours, and fringe benefits, such as healthcare coverage and paid sick leave, and (3) reducing and offsetting operating costs. Labor and wage shortages are also linked to long-established U.S. labor standards – the federal minimum wage has been frozen for over a decade and the tipped minimum wage for 30 years. Recently, the proposed Raise the Wage Act of 2021 would incrementally raise the federal minimum wage to $15 an hour by 2025 and the tipped minimum wage to meet the federal minimum by 2027. While there are fears that minimum wage increases will slash jobs, there is research that suggests the opposite – negligible effects on employment as well as positive effects on employee earnings and wellbeing. Time will tell, but certainly, minimum wages ought to catch up with the cost of living, and the livelihood of restaurants hinges on the delicate execution of restaurant industry and U.S. labor reforms.

Amanda Michiko Shigihara is an Assistant Professor in the Department of Sociology at California State University Sacramento.  Shigihara has spent several years studying and writing about restaurants.    

Comments 6

Evie Turk

October 13, 2021

Very informative

We brown

October 14, 2021

You said it!

Asif Iqbal

November 17, 2021

i like this post

John Monaghan

November 29, 2021

We should not be proud of the stupidity of the debate re minimum wage. The existence of poverty is extremely expensive. As FDR said all those years ago a company or organization that does not pay a Living wage should not be allowed to exist in this Country. A major difference between us and Sparta is we aren't allowed to shoot members of the underclass.

Karen Schwartz

February 3, 2022

If you can’t find anything better than a minimum wage job you’re the problem

April 4, 2022

Yes, the restaurant industry is now developing a rapid pace, especially in big cities, but many employees depress salaries, I would like that this topic would have risen more often. Thanks for the excellent article.

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