Restaurant Staff Shortages Making Employers Bid for Workers

Restaurant Staff Shortages Making Employers Bid for Workers Restaurant Staff Shortages Making Employers Bid for Workers

A now hiring sign is seen at a Dunkin' Donuts franchise in Danville, Pennsylvania on August 6, 2021.(Sipa via AP Images)

By Charles Kim | Saturday, 21 August 2021 02:10 PM

Even with huge gains in job openings for restaurants and other service sectors, employers are finding themselves in a bidding war to attract workers.

"Your restaurant neighbor next door might offer $1 more, then you go back and offer $1 more over that to just retain your people," George Frangos, owner, and president of Farm Burger, told Business Insider Saturday.

The chain began in 2008 as an organic alternative for dining by bringing together “a community of ranchers, farmers, chefs, restauranteurs, and eaters, to form a “sustainable” burger business, according to the company, which has 12 locations in four southern states.

Frarngos told Insider that he raised wages 20% to $15 per hour for his staff to remain competitive.

"You just rework your model a little bit and make sure staff are taken care of," he said.

Farm Burger is far from alone ,with other large chains like McDonalds, Chipotle and Starbucks also hiking wages to get workers on the job.

According to the U.S. Bureau of Labor Statistics, nonfarm payrolls increased by 943,000 in July, including a 560,000 drop in the number of long-term unemployed.

While that is certainly good news after months of pandemic shutdowns, the total number of those unemployed for more than six months is 3.4 million, some 2.3 million higher than at the start of the COVID-19 lockdowns.

Unemployment aid from the federal government, which is an extra $300 per week on top of any state benefits and has been extended in most cases for more than a year, will come to an end Sept. 6, which could push people back into the job market, helping employers fill the estimated millions of vacancies.

The leisure and hospitality industry saw an increase of 380,000 with two-thirds of the jobs in food services (253,000), while the industry is still down 1.7 million jobs, or 10.3%, from its pre-pandemic level, according to BLS.

In a July report, Business Insider said that 74% of independent restaurant owners were having a harder time finding workers now compared to before the pandemic.

The Washington Post reported earlier this month that the average pay for restaurant and supermarket workers topped $15 per hour, as some states and the federal government debate making the rate the new minimum wage.

According to the Post, 80% of all U.S. workers now earn that rate or more, up from 60% in 2014.

With larger companies jumping on the higher wage bandwagon, smaller employers have no choice but to follow suit, making this one of the fastest wage increase periods since the 1980s.

Once set, wages generally remain permanent and not scale back as time moves forward.