Employment Rates Are Growing, but Is It Fast Enough?

The inability to find quality staff has been on the mind of business owners since the start of the year. Now, according to new data released by the U.S. Bureau of Labor Statistics, things are looking up, with 943,000 jobs added last month across the country’s entire workforce. The most notable job gains occurred in segments such as leisure and hospitality, local government, education and professional and business services, the report outlines.

The food services segment, for example, accounted for 253,000 of those jobs added in July — about a fourth — and represents a 30% increase in hiring over June. After hiring over 1.3 million employees since January, the restaurant industry now employs 11.3 million people, compared to 9.8 million people in July 2020. In fact, restaurant owners may be surprised to learn that the industry has now had seven months of job gains. 

Still, while July’s employment numbers are nearly double the industry's employment low of 6.3 million reported in April 2020, it is still about 1 million below February 2020 employment numbers of 12.3 million. In total, 8.7 million people remain unemployed in the U.S., which is well above the pre-COVID-19 number of 5.7 million in February 2020.

Despite high unemployment numbers, employers across every industry are struggling to find staff due to increased unemployment benefits, safety concerns about the Delta variant and worries about enforcing disparate health policies like vaccination requirements. And all of these factors are particularly present in the foodservice industry, which saw employees quitting in record numbers in April and May. 

This employee exodus has come at an inopportune time for the restaurant industry, which saw same-store sales increase for 19 straight weeks through July 25, according to Black Box Intelligence. Several big restaurant franchises, including McDonald’s, Texas Roadhouse and Tropical Smoothie, have reported Q2 sales well over 2019 levels. 

Now, to hire enough staff to keep up with the growing demand for on-site dining, restaurant employers are realizing they need to offer sign-up bonuses, schedule mass hiring events and, perhaps most notably, offer higher wages. Earlier this year, 76% of restaurant workers said they were planning to leave jobs over low wages and tips, according to One Fair Wage. 

Many big franchisors and chains, including Darden, McDonald's and Starbucks, are raising wages and offering enhanced employee benefits. Average hourly earnings for nonsupervisory workers throughout the economy increased from $14.57 per hour in March to $15.41 in July, according to BLS data. In May, the industry surpassed $15 per hour in average wages for the first time.

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

While recovery from the pandemic may have put pressure on higher wages, restaurants have historically operated on razor-thin profit margins, and many owners simply don’t have the funds to increase wages right now. Plus, with so few employees available, many owners have had to reduce hours and or close on certain days, which will only reduce revenue further.

It appears that employees are, slowly but surely, returning to work. But for business owners who don’t have the time to spare, increased wages and benefits may be a solution for speeding up the process.