The labor shortage has created a ‘bidding war’ for staff as restaurants that are desperate for workers hike wages, says a burger chain owner

Farm Burger owner George Frangos
“This is a very unique moment in restaurant history,” Farm Burgers president George Frangos said.

  • Restaurants are raising wages to compete with each other amid the labor shortage.
  • The owner of Farm Burger, which raised staff wages by around 20%, called it a “bidding war.”
  • Some of its restaurants are closing one day a week to give staff a break as diners return in droves.
  • See more stories on Insider’s business page.

The huge shortage of restaurant workers has led to a “bidding war” for staff that’s driving wages up across the industry, the owner of a burger chain said.

“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 Insider.

One pizza chain franchisee even told Bloomberg that he’s asking managers to poach workers from rival restaurants because “everything is fair game.”

Average wages for nonsupervisory staff in the restaurant industry hit the $15-an-hour mark for the first time in May and soared to $15.31 in June, data from the Bureau of Labor Statistics shows.

Wages were already rising because of the push for a $15 federal minimum wage, but the labor shortage added further fuel to the fire. Restaurant chains including McDonald’s, Chipotle, and Starbucks have all said they’ll raise wages.

Frarngos told Insider that he’d hiked up wages for Farm Burger staff by around 20% to $15 an hour.

Farm Burger
Farm Burger’s owner said the company lifted wages by around 20% during the pandemic.

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

Read more: Bite Ninja just receives Y Combinator funding to bring virtual drive-thru cashiers to more fast-food chains

Farm Burger has 12 restaurants across the Southeast. Frangos said that around 20% of workers left over health concerns at the start of the pandemic “and they didn’t come back.” The number of workers leaving is now rising again, but this time it’s because they want to change the industry, he said.

“Being in the business over 30 years, [the labor shortage is] pretty unprecedented,” Frangos said, adding that he didn’t know when it would end. “This is a very unique moment in restaurant history.”

Farm Burger
Farm Burger has 12 restaurants across the Southeast.

Frangos said the labor shortage was made worse by restaurants becoming “super busy all of a sudden” amid the vaccine rollout. Some of his restaurants had decided to close one day a week “just for everybody to kind of take a break,” he said.

The labor shortage “affects our team physically, emotionally, it makes it hard just to do the job that we’re trying to do on a daily basis,” he said.

Other restaurants told Insider that their small footprint meant they’d largely managed to avoid the effects of the labor shortage because they needed fewer staff.

Mark Setterington, the CEO of Island Fin Poké, said that his 18 poké-bowl restaurants usually needed two or three staff members per shift. Because around 65% of customers get their food to takeout, the restaurants are 1,200 square feet on average, with 20 seats, he said.

Island Fin Poké
Island Fin Poké restaurants have just two or three staff members per shift.

Setterington said his restaurants hadn’t been hit as much by the restaurant shortage, partly because most of its evening staff were high-schoolers working their first job. Some of them earned between $5 and $10 an hour in tips, he said.

Like at Island Fin Poké, Rush Bowls’ smoothie-bowl stores usually just need two or three employees per shift, or four if it’s really busy, owner Andrew Pudalov said.

“We always phrase it as: you’re a bartender serving healthy food,” he told Insider. “So there’s no back of house.”

The labor shortage “is not as challenging as it can be for a lot of the other companies out there,” Pudalov added. “We’re working through it.

Do you work in the restaurant industry? Got a story? Email this reporter at

Read the original article on Business Insider

A customer left a $10,000 tip for staff at a Florida restaurant to say thanks to them for showing up and working through the pandemic

A mask-clad waiter serves patrons sitting at a sidewalk table of A Brasileira Cafe in Rua Garrett on the first day of shops reopening with limitations and restaurants allowed to serve patrons at sidewalk tables during the COVID-19 Coronavirus pandemic on April 05, 2021 in Lisbon, Portugal.
Restaurant staff have had to face stressful working conditions in recent months.

  • A diner left a $10,000 tip for staff at a Florida restaurant on Tuesday.
  • “He said he appreciated what they’ve been through,” the owner of Wahoo Seafood told Newsweek.
  • Restaurant staff have faced COVID outbreaks, maskless patrons, and longer hours during the pandemic.
  • See more stories on Insider’s business page.

A diner left a $10,000 tip at a seafood restaurant in Gainesville, northern Florida, CBS4 first reported.

Shawn Shepherd, the owner of Wahoo Seafood, told Newsweek that the diner asked to see the 10 members of restaurant staff that were working during his visit on Tuesday.

“He said he appreciated that they showed up and what they’ve been through,” Shepherd said. “He said that he wanted to give everyone a $1,000 tip.”

In comparison, the diner spent $144.66 on his meal, a photo of the receipt the restaurant shared on Facebook shows.

Shepherd told Newsweek that this was the biggest tip staff had ever received in his 35 years owning the restaurant.

“The last year and a half hasn’t been easy on this industry,” Shepherd said in the Facebook post. “We’re hurting and we’re exhausted, but this incredible act of kindness has restored our faith in humanity.”

The pandemic has devastated the restaurant industry. Between March 2020 and March 2021, one in 10 US restaurants shuttered permanently, according to a report by food-industry research firm Dataessential, triggering thousands of layoffs.

At restaurants that did stay open, staff have had to face stressful working conditions compounded by COVID-19 outbreaks, maskless customers, and the labor shortage.

Read more: How a tiny food-tech startup convinced industry heavyweights like Chick-fil-A and Taco Bell to rely on it to fight a labor shortage

While many white-collar workers have worked from home during the pandemic, restaurant staff have largely continued working in person. Even during times when states closed restaurant dining rooms, many continued offering takeout and delivery.

Fast-food workers are “especially vulnerable” to COVID-19 community transmission, a damning report by UCLA and UC Berkeley found. Between July and December 2020, around 15% of Los Angeles County’s documented coronavirus workplace outbreaks were at fast-food restaurants, the report found.

Alongside this, restaurant staff have also had to deal with increasingly difficult and impatient customers.

A KFC worker, for example, said in an OSHA complaint that she was threatened, harassed, and even shot with a BB gun on the job during the pandemic, while a restaurant told The New York Times that diners had threatened to sue it after they didn’t get the specific table they had requested.

Some of the diners’ behavior is directed towards COVID-19 safety measures, too. One 19-year-old McDonald’s worker told Insider she was assaulted after asking a customer to wear a mask. In another case, customers threatened to spit on and cough at front door staff at The Alembic in San Francisco after being asked to show proof of vaccination, Insider’s Allana Akhtar reported.

Some restaurant workers said they were afraid to enforce COVID-19 safety precautions in case they miss out on tips.

Finally, the labor shortage means that workers in the hospitality industry are facing longer hours and harder work. A server at a restaurant in Tennessee told CNN that servers were over-stretched, which means customers got worse service and paid lower tips.

One restaurant in Massachusetts even shut down for a day after rude diners swore at staff and made them cry, telling The New York Times that diners seemed unprepared for the longer wait times and limited menus associated with the current staffing and supply shortages.

Read the original article on Business Insider

Vaccine mandates could make staff quit, says one exec who wants workers to get vaccinated but fears losing them during the labor shortage

A masked waiter serves meals for two clients by the statue of Fernando Pessoa outside A Brasileira Cafe in Rua Garrett during the COVID-19 Coronavirus pandemic on May 27, 2020 in Lisbon, Portugal
New York City is mandating vaccines for restaurant staff.

  • A healthcare-agency exec told CNN that he’d like to introduce a vaccine mandate for his staff.
  • But he fears some would quit – and he can’t afford to lose workers.
  • The labor shortage has left employers scrambling to cling onto their staff.
  • See more stories on Insider’s business page.

Pressure on companies to introduce vaccine mandates is mounting amid the spread of the Delta variant.

Staff at tech giants Uber, Google, and Facebook need to be vaccinated before they can return to the office, while Houston Methodist Hospital hit the headlines in late March after it became one of the first hospitals to mandate vaccines.

A home healthcare-agency exec told CNN that he’d like to require his staff to get the jab, too. However, he fears that some would quit over the policy and can’t afford to lose workers amid the labor shortage.

Mandating vaccines “puts you at risk of alienating the staff, if not losing them to a competitor,” Kevin Smith, president of Massachusetts-based Best of Care, told the outlet.

“No one can afford to do that,” he said. “That is why any employer in our industry is so reluctant to impose a mandate.”

Read more: A top consulting firm just announced one of the strictest vaccine mandates yet: Get vaccinated or don’t get paid

More than a third of employed US adults don’t want their workplace to introduce a vaccine mandate, a late-July poll by Gallup found.

“Employers in a labor shortage environment don’t want to create any barrier for employment, let alone any cause for people to go elsewhere,” Julia Pollak, chief economist at ZipRecruiter, told CNN.

Many of the companies requiring staff to get vaccinated, like Google and Alvarez & Marsal, offer high wages and other benefits. But blue-collar workers, who generally aren’t as well paid, don’t have as many reasons to stick around if they disagree with their company’s vaccine mandate. This is especially true during the labor shortage, since they’re in high demand.

“If you run a restaurant or a store and you have employees who are vaccine-hesitant, they are going to quit and go to the store or restaurant next door,” Brian Kropp, chief of research at Gartner’s HR practice, told CNN. “It’s a whole lot easier for people to switch jobs, particularly in today’s labor market.”

Some companies that introduced the policy have had backlash from staff who didn’t want to get the vaccine.

Houston Methodist Hospital, for example, said in late June that 153 workers quit or were fired after they refused to get the jab. More than 100 workers had sued the hospital over the policy, saying it was “forcing its employees to be human ‘guinea pigs’ as a condition for continued employment.”

But the hospital told Insider that its remaining 26,000 staff members had been either vaccinated or been given an exemption.

“All our employees have now met the requirements of the vaccine policy and I couldn’t be prouder of them,” CEO Marc Boom said in an email to staff. “Our employees and physicians made their decisions for our patients.”

Best of Care’s Smith said that only 52% of the company’s 400 staff members have been vaccinated. He told CNN that he’d like the government to introduce a state or federal vaccine mandate for his industry. He said such a decision would protect the health of staff and clients, and level the playing field among employers.

“From a pure safety standpoint, it would make me feel better if it were required,” he said. “And it would take the pressure off me.”

Read the original article on Business Insider

The unemployed may never come back. Here’s what that means for the economy.

Woman in factory
  • The US economy has had a strange comeback, where overall output is back to its pre-recession level but employment is still low.
  • That means we’re selling as much stuff as we were in 2019 but with almost 6 million fewer workers.
  • Workers could stay sidelined and we’ll keep making more with less, or they’ll come back to a more productive economy that could boom for years.
  • See more stories on Insider’s business page.

The US economy has been on a rampage all summer, with growth, consumer demand, wage growth, and job openings all at historically high levels as the country reopened.

But there’s a strange divide in the recovery, and how it works itself out could define the rest of the decade. There’s a split between the recovery of GDP and employment. The first is recovering much faster than the latter.

Both total economic output, as measured by real gross domestic product, and the number of Americans with jobs plummeted last spring, and both have spent the last year sharply recovering.

Real GDP recently surpassed its pre-pandemic peak, but as of July there are still about 5.7 million fewer employees on payrolls in the US than there were in February 2020.

That means the US economy is making and selling as much stuff as it was in 2019, but with nearly 6 million fewer workers. This suggests a big increase in productivity.

If those gains hold up, there are two very different paths forward from here: Workers might stay on the sidelines and output will keep modestly growing, with a permanently smaller labor force, or those workers could return to fuel a more productive economy than most developed countries like the US have seen in decades.

Doing more with less

One possibility is that we could maintain the productivity gains seen during the pandemic with a permanently smaller workforce.

Economics blogger Kevin Drum made some back-of-the-envelope calculations, estimating that by the end of 2022, output would be roughly where it would have been without the pandemic, but with only about 3.5 million more employed Americans than we have now. (Drum used the CBO’s estimates for what potential GDP could look like, while extrapolating out from the productivity growth over the last several months.)

Economist Robert Gordon, who specializes in studying long-run trends in productivity and economic growth, shared similar thoughts with UCLA Anderson economist Leo Feler in a February podcast. This was a big deal in the economics community, as Gordon is a famous pessimist when it comes to productivity.

Gordon noted that a lot of the productivity growth over the last year came from high-income, high-productivity workers who can do their jobs from home without all the expenses and trappings of commutes and office buildings.

If those trends continue, Gordon predicted you could see a dampening of productivity growth across the broader economy as sectors like commercial real estate and public transportation struggle in an environment where office buildings in downtown business districts remain empty.

Doing more with more

There’s another possible future, however. If productivity growth sustains and the US returns to pre-pandemic employment trends, that could turbocharge overall economic growth for years to come.

Bloomberg columnist Conor Sen made his own back-of-the-envelope calculations along those lines. The US could actually see 7% annual GDP growth over the next couple years, he wrote, much higher than most estimates.

Sen assumed a return to pre-pandemic employment trends by the end of 2022 – adding back all of the 5.7 million lost jobs, plus the jobs that would have been added to the economy without the disruptions of the last year – as well as ongoing productivity growth as businesses invest in automation and other technologies.

This also seems to be the goal of President Joe Biden and the Democrats’ proposed economic policies. Both the $1 trillion bipartisan infrastructure bill and the likely party-line $3.5 trillion reconciliation bill are full of proposals to boost productivity through investments in better physical infrastructure and to make it easier for Americans to return to the workforce through initiatives like improved access to child care. If there is such a thing as “Bidenomics,” it’s the doing-more-with-more approach of this scenario.

This all depends on whether or not workers come back

These are the extreme ends of a spectrum, and the economy could well end up somewhere in the middle, with modest-to-fast gains in both employment and growth. But a lot will depend on just how many workers come back.

Even though the US has been adding jobs at a stunning pace through the summer, labor force participation remains quite a bit lower than it did before the pandemic. Many older Americans have likely permanently retired, and many workers may be waiting on the sidelines because of ongoing concerns about the pandemic and uncertainty around schools reopening.

If job openings are enticing enough to bring in those sidelined workers, we could see an economic boom. If they aren’t, or if the productivity gains we’ve seen over the last year represent a permanent dislocation of a lot of pre-pandemic jobs, we could have a more productive but smaller workforce.

It all comes down to just how much growth workers – and employers – want out of the economy.

Read the original article on Business Insider

School’s starting back up, but moms might not return to work for months

A mom working from home with children
  • It’s back to school for real this year, as many more schools reopen for in-person learning.
  • Many parents, especially mothers, may have exited the workforce over childcare responsibilities.
  • Insider asked experts if those parents will return. The answer is complicated.
  • See more stories on Insider’s business page.

While the pandemic has held never-ending twists and turns for parents, there finally seems to be some structure in sight: A traditional back-to-school season.

When schools and daycares closed during the pandemic, some parents dropped out completely from the workforce. Others had to realign their work lives and priorities around suddenly being both full-time workers and childcare providers.

Right now, some industries are facing a labor shortage. Those job openings could presumably be filled up by parents – but Jasmine Tucker, the director of research at the National Women’s Law Center (NWLC), worries about the quality of those positions when it comes to wages and scheduling.

According to NWLC, women saw the largest employment gain in a single month in July 2021 since August 2020, based on employment figures from the latest jobs report. Women gained 649,000 jobs in July, higher than the 465,000 the month before.

But a “return to normal” probably isn’t coming anytime soon for mothers, especially with the rise of the Delta variant.

There’s some “real concern” about “whether you’re comfortable sending your kid back to school,” Tucker told Insider.

As proper school reopenings loom, Insider asked experts what the outlook will look like for women in the workforce.

Women might not return for months

C. Nicole Mason, president and CEO of the Institute for Women’s Policy Research, told Insider we won’t really see this rebound of women coming back or entering the labor force for several months.

“Daycares are still closed and schools are still closed, especially during the summertime. So I don’t expect to see a change until the third or fourth quarter of the year when schools are slated to be open, the fourth quarter really,” Mason said.

Mason said the recovery of women in the labor force has been slow.

There were 74.5 million women aged 20 and over part of the labor force in February 2020. This dropped to ​​70.9 million in April 2020 and has since gone up to around 72.9 million, still down by 1.6 million from before the pandemic.

The following chart shows what labor force participation rates between men and women have looked like over the pandemic. The rate as of July is 57.5% for women aged 20 and over and 69.8% for men aged 20 and over, both of which were unchanged from June.

Daniel Zhao, senior economist at Glassdoor, told Insider he hopes more parents will be able to return to the labor force once school is back in the fall, but it’s unclear by just how much.

“I don’t expect parents to suddenly flood back into the labor force,” Zhao said. “Many parents have already adapted by working remotely or part-time during the pandemic. We might not get many new workers rejoining the labor force, as opposed to some workers just taking on more hours if it’s a part-time job or finding a different remote job that is more flexible or has more opportunities.”

The issue may not just be mothers returning to work

“What I’ve been seeing in the data for working mothers is this incredible resiliency,” Misty L. Heggeness, a principal economist and senior advisor at the US Census Bureau, told Insider of pandemic trends. “They tend to bounce back, and they bounce back quickly and they bounce back often.”

One big concern is the impact that working through the pandemic had on mothers. Heggeness is worried about burnout. There’s a toll when office lunches become a time for feeding children, along with yourself, and when leave goes towards addressing childcare crises, not for rest or relaxation.

Women, who were already disproportionately taking on caregiving and family roles, increased their time spent on things like schooling during the pandemic after many kids learned at home.

“I feel like this pandemic, as horrific as it has been, has given us potentially – if we choose to take it on – an opportunity to do better,” she said.

That means doing better “in recognizing how much we take for granted unpaid domestic tasks in this country” and “the gendered effect of that” – along with the very real economic impact we’ve seen when that doesn’t happen.

Read the original article on Business Insider

Black workers saw a big drop in unemployment in July, but many left the labor force altogether

Unemployment benefits line
People line up to receive unemployment benefits.

  • The unemployment rate for Black Americans dropped by 1.0 percentage point in July.
  • But that’s in part because more Black Americans left the labor force altogether.
  • One expert said that it’s a “mystery” why labor force participation dropped.
  • See more stories on Insider’s business page.

July’s jobs report brought more jobs than expected, with the US adding 943,000 nonfarm payrolls. The unemployment rate also dropped down to 5.4%, a bigger dip than anticipated.

All told, the report shows signs of more robust recovery. In fact, Insider’s Ben Winck and Andy Kiersz report that July’s numbers were so good that they actually shaved four months off of economic recovery.

Despite what looks like a heartening report, Black Americans are still falling behind – they were increasingly no longer looking for work or employed in July.

In July, the unemployment rates for Black workers and Hispanic or Latinx workers dropped. Black unemployment dropped by 1.0 percentage point, while Hispanic or Latinx unemployment dropped by 0.8 percentage points. Those figures are higher than the drop in white unemployment, which declined by just 0.4 percentage points, as seen in the following chart:

Even so, unemployment rates are still elevated for Black and Hispanic or Latinx workers. As seen in the chart, these rates are also still higher than pre-pandemic rates.

Dr. William Spriggs, the chief economist of the AFL-CIO, tweeted that “though the Black unemployment rate fell because of people dropping out of the labor force, the Black unemployment rate at 8.2% was less than the unemployment rate for High School dropouts 9.5%.”

Data for Asian Americans only goes back until 2003, not as far back as the other race and ethnicity groups noted above. The unemployment rate for Asian Americans did drop from 5.8% in June to 5.3% in July.

In June, the unemployment rate for Black Americans actually increased, even as the country added a revised 938,000 jobs. It showed how workers of color – along with women – continued to be left out as recovery picks up.

But the drops in unemployment rates have important caveats. Nick Bunker, economic research director at Indeed, told Insider the drop in Black unemployment was driven in part by Black workers leaving the labor force altogether – meaning that they weren’t counted as unemployed.

“That’s one of the situations where the unemployment rate falls for a bad reason,” Bunker said. “It wasn’t a decline in unemployment because more people got jobs. So, hopefully that’s a one-month aberration.”

The following chart highlights the labor force participation rate by race and ethnicity since 2001:

The Black labor force participation rate dropped by 0.8 percentage points to 60.8% in July, while labor force participation rates ticked up for white and Hispanic or Latinx Americans. In June, a net total of 240,000 Black Americans joined the labor force. However, 249,000 exited in July. The labor force participation rate for white Americans was 61.6% in July, and it was 65.7% for Hispanic or Latinx Americans.

“It’s a little bit of a mystery as to what happened in July, in particular,” Jasmine Tucker, the director of research at the National Women’s Law Center, told Insider. “There’s not really a big seasonal change that’s happening and there’s not something that’s tied to school.”

Those labor force drop outs will likely only exacerbate pre-existing inequities for jobless workers. Tucker said the numbers underscore the need for policy changes like funding childcare, raising the minimum wage, and paycheck fairness.

“The cost of not doing anything or not doing enough right now is way higher than doing too much,” she said.

Read the original article on Business Insider

US private payrolls rise by 330,000 in July – less than half what economists expected

Hiring fair Florida coronavirus
A man hands his resume to an employer at the 25th annual Central Florida Employment Council Job Fair at the Central Florida Fairgrounds.

  • US private-sector businesses added 330,000 jobs in July, ADP said in its monthly hiring report.
  • The print fell well short of the 683,000-payrolls forecast but still marked a seventh straight gain.
  • More states began cutting enhanced unemployment benefits in July to push more Americans into the workforce.
  • See more stories on Insider’s business page.

The US private sector added much fewer jobs than expected last month as several states began ending enhanced unemployment benefits and COVID cases crept higher, driven by the surging Delta variant.

Private payrolls rose by 330,000 in July, ADP said in its monthly employment report. That compares to a median estimate of 683,000 jobs from economists surveyed by Bloomberg. The print marks a seventh straight month of payroll gains but a sharp slowdown from the previous month’s gains.

The initial June count was revised to 680,000 from 692,000.

The July report is the first to reflect job gains in states that began cutting the federal boost to unemployment insurance ahead of the planned September expiration. Twenty-six states – all but one led by Republican governors – have slashed the benefit early in hopes of driving more unemployed Americans into the workforce.

Insider calculations of UI claims data suggest the early cancellation has been effective at pushing people off of unemployment – but this ADP report indicates that’s not necessarily translating into faster growth in actual jobs.

Filings for unemployment insurance hovered above pandemic-era lows throughout July and ended the month at 400,000, or roughly double the pre-crisis average, and Insider has reported they may never approach their pre-pandemic norm again. Continuing claims, which count Americans receiving unemployment benefits, also wavered after months of steady decline.

And while much of the country’s economy stayed open through July, a sharp rise in COVID cases likely dragged on some hiring plans. Daily case counts began to tick higher at the beginning of the month. By the end of July, the more transmissible Delta variant drove case counts to their highest levels since February.

“When we see increases in case counts, even when it’s from lower levels, there’s that uncertainty that waves a long shadow over the labor market,” Nela Richardson, chief economist at ADP, told reporters on Wednesday. “The overall takeaway is that the recovery is happening, but its path is something we’ve never seen before.”

She continued: “We might see some stronger months and some weaker months as we proceed towards a full recovery.”

July’s biggest employers

The leisure and hospitality sector added the most jobs throughout last month, with a gain of 139,000 jobs. The education and health services sector followed with a 64,000-payroll gain. Both sectors were some of the hardest hit by the pandemic and counted for the bulk of job gains since reopening began in the spring.

Conversely, the information sector shed 1,000 jobs through July. Hiring was nearly flat in the construction and natural resources and mining sectors.

Businesses with between 50 and 499 employees hired the most, posting a 132,000-payroll gain. Firms with more than 500 employees added 107,000 jobs, and companies with fewer than 50 workers gained 91,000 payrolls, according to ADP.

Supply chain pressures continued to weigh on goods-producing industries, particularly in manufacturing and mining, Richardson said.

Labor shortages also dragged on gains in both goods and services sectors, according to ADP. Unemployed workers could “wait it out a little bit” due to support from stimulus payments and enhanced unemployment insurance, Richardson said.

Still, those hiring bottlenecks will probably ease into the fall, she added. As more Americans get vaccinated, schools reopen, and stimulus support lapses, it’s likely labor force participation improves and more workers come off the sidelines, Richardson said.

Read the original article on Business Insider

A 19-year-old fast food boss says he expects to lose half his staff in the next few weeks, as the labor shortage continues to hammer restaurants

A fast food restaurant manager wears a black t-shirt and baseball cap while sitting at a high table.
Cabrera said that he has matured quickly since taking on the general manager role.

  • Jason Cabrera, 19, is the general manager of Layne’s Chicken Fingers in Texas, earning $50,000 a year.
  • Cabrera said that his biggest problem is finding enough workers in the labor shortage.
  • He expects to lose 11 members of staff in the next few weeks as they go off to college, he said.
  • See more stories on Insider’s business page.

A 19-year-old manager of a Texas chicken restaurant told Insider that he expects to lose half of his staff in the next few weeks.

Jason Cabrera runs the Allen, Texas, branch of the Layne’s Chicken Fingers restaurant chain, which promoted teenagers to management roles because of a severe staff shortage. Cabrera, who earns a $50,000 salary, estimates that he’ll need to replace 11 of his 22 junior employees in the coming weeks, with many going off to college out of state.

The labor shortage was the biggest challenge he faces as the restaurant manager, he said.

Garrett Reed, CEO of Layne’s, told Insider in a separate interview that he would “usually have at least a handful of seasoned managers, people in their late-20s, early-30s” running his eight restaurants, but the labor shortage led him to promote three workers who are 18 or 19 to manager roles, including Cabrera.

Reed has found it “tough to compete” with places like Walmart and McDonalds, which can afford to offer higher wages, and many of his workers have left to join bigger companies, he said.

Read more: Leaked documents show how McDonald’s plans to win the 2021 chicken-sandwich wars. Here’s everything we know about the looming fast-food battle.

Cabrera took on the role a week after his 19th birthday in January.

He told Insider that he’s “huge on recruitment” and uses hiring service CareerPlug to find workers.

“I always refresh that page every day,” he said.

“I’m always looking for someone and there’s days I won’t get any, there’s days I’ll get five.”

In recent months, restaurants have struggled to find enough workers to keep up with customer demand, leading some owners to hike wages and offer large sign-on bonuses to entice employees.

Hiring appears to be picking up: Food services and drinking places added 194,000 jobs in June, accounting for more than half of all job gains in leisure and hospitality industries that month, per Labor Department data. However, three in four independent restaurants are still struggling for workers, according to a recent poll.

A fast food worker prepares fries for the deep fat frier in the restaurant kitchen.
Jason Cabrera told Insider that he expects to lose 11 members of staff in the next few weeks as they go off to college.

Cabrera insists a lack of staff has not led to a drop in standards. “I make sure when I do my interviews and whatnot, people know that I have high standards,” Cabrera told Insider. He said that he looks for staff who care about the quality of service, and work with urgency.

Cabrera’s annual earnings are far above the $9.50 per hour “learning wage” that Reed said his entry-level employees receive, and the $28,860 per year the average 16 to 19-year-old can expect to make in the US, per Labor Department data.

His salary doesn’t include any performance-linked bonuses general managers might receive at the end of the year.

Cabrera said that he has struggled in past jobs to be taken seriously due to his young age, but has embraced the responsibilities of his new role.

“Just knowing that anything that happens inside of that store is on me,” he said. “Anything that goes wrong, anything that goes right, it all comes back to me.”

Cabrera told Insider that he’s saving up so he can open his own Layne’s franchise. “I just want to see how fast I can get there,” he said.

Read the original article on Business Insider

3 in 4 independent restaurants are still struggling to find staff, even as the hospitality industry adds hundreds of thousands of jobs, according to a poll

A server carries drinks to a table at P.J. Whelihan's restaurant and pub in Spring Township
Restaurants top Alignable’s list of small business sectors that are still in the midst of the labor shortage.

  • Restaurants are struggling to find staff more than other small businesses, a poll found.
  • 74% of independent restaurant owners say it’s harder to find workers now than before the pandemic.
  • Four in five small businesses told Alignable that their supply costs are higher, too.
  • See more stories on Insider’s business page.

The leisure hospitality industry appears to be on its way to recovery after adding 343,000 people payrolls in June, making up 40% of total US job gains – but independent restaurants say they still can’t get enough staff.

Seventy-four percent of independent restaurant owners say it’s harder to find employees than it was pre-pandemic, according to a survey conducted by small-business network Alignable in the first half of July.

As a result, restaurants top the list of small business sectors that are still in the midst of the labor shortage, according to Alignable.

Read more: These 9 food tech startups are capitalizing on the labor crunch with tools that help franchisees hire or automate the restaurant workforce

The lack of available workers is having huge effects on some restaurants across the US. Some businesses have been forced to reduce their hours because they can’t get enough staff, and half said that they struggled to pay rent in May.

After restaurants, the transport sector was the second-worst hit by the current labor shortage, according to Alignable’s survey, with two-thirds of small business owners in the sector saying they’re struggling to find staff. This was followed by the automotive industry at 63%, manufacturing at 62%, and the beauty sector at 59%.

Overall, half of the 5,911 small business owners that responded to Alignable’s survey said it’s more difficult to hire now than it was before the pandemic.

The labor shortage is forcing businesses to push up wages and roll out better perks to attract more workers. In Alignable’s poll, 44% of small business owners said they were compensating their staff more than before the pandemic.

It’s not just wages that are rising. Inflation is pushing up the price of goods, too. Four in five small businesses told Alignable that their supply and inventory costs had risen. Just over a quarter said that these costs were up by more than 25%.

“It’s killing my profit and it’s about ready to cause me to close my doors permanently,” an unnamed small business owner in the construction industry told Alignable.

The owner of Brady’s Restaurant in Maine told Insider that her food suppliers were hiking prices and substituting some orders for different brands or quantities. She said that she wasn’t able to get pineapple juice for around three weeks, and that her supplier substituted an order for 8-ounce burger patties with 2-ounce ones. Because of the ingredient shortages, she’d been forced to cut the restaurant’s opening hours, she said.

Businesses can get around the higher costs of goods and staff by putting their own prices up – but small businesses are reluctant to make big price changes, the survey shows. Forty-one percent of small businesses said they raised their prices during the pandemic, but only 7% had raised them by more than 25%.

Read the original article on Business Insider

The US economy could have 28 million more jobs over the next decade than the federal government thinks

Now Hiring Sign
A pedestrian walks by a now hiring sign at Ross Dress For Less store on April 02, 2021 in San Rafael, California.

  • The US could reach even higher than expected levels of full employment over the next decade.
  • A new paper from the Roosevelt Institute finds the employment-population ratio could be 68% by 2031.
  • To do this, the authors looked at gaps in employment by race, gender, and education.
  • See more stories on Insider’s business page.

As the US continues to recover from the pandemic, a new paper finds the number of Americans with jobs could potentially eventually be far higher than before the crisis took a toll on workers and businesses.

The Roosevelt Institute just released a paper that looks at what full employment could look like in a decade by looking at how much additional job growth is needed to close gaps by age, race, education, and gender.

Based on their research, the authors find the employment-population ratio could be 68% by 2031, higher than ratios reported since 1948. The authors note this is about 10 points higher than the Congressional Budget Office’s projections of maximum employment.

Closing the employment gaps for race, gender, and education could mean the US reaches 190 million workers by 2031, or about 28 million more jobs than CBO’s projections, the authors found.

“Moving toward true full employment will have tremendous benefits – not just more growth, but a more equal economy,” Lauren Melodia, deputy director of macroeconomic analysis at the Roosevelt Institute and one of the authors, said in a press release. “With strong public investment, we can greatly reduce the employment gaps between Black and white workers, women and men, and those with more and less formal education.”

“If full employment means that everybody who wants to work and is able to work has a job, we were very far from that in 2019. And that suggests that we potentially have space for much faster growth if we can sustain demand over the next decade than a lot of people are expecting,” J.W. Mason, a fellow at the Roosevelt Institute and one of the report’s authors, told Insider. “So the larger story here is the possibility of a real historic boom in the coming years.”

The employment-population ratio took a hit during the pandemic, reaching a record low of 51.3% in April 2020 as people left the labor force or had their jobs cut. The ratio is now back up to 58.0% as of June 2021, still below pre-pandemic rates.

But the new paper argues that there needs to be “sufficient demand” to help get more Black Americans, women, and less-educated Americans into jobs and to reach full employment.

For example, take the employment gap over time for Black and white workers. The authors write that gap widens during recessions but narrows during tight labor markets.

“Because less-favored groups – Black workers, women, those with less formal education, those just entering the labor market – are generally last hired and first fired, the gaps between more- and less-favored groups vary systematically over the business cycle,” the authors wrote.

There aren’t enough jobs for everyone, Mason said, so some people don’t get hired while some are more “systematically favored in the labor market,” making it harder for some Americans to get hired even if they’re a qualified candidate.

“The data shows employment prospects for disadvantaged groups are more dependent on labor market conditions than for more privileged groups,” the authors wrote. “Employment gaps by age, education, and especially race are strongly responsive to current labor market conditions, as reflected in the unemployment rate.”

The unemployment rate for Black workers is 9.2% and 5.2% for white workers as of June 2021. Right before the pandemic, the difference between these two unemployment rates was three percentage points.

“When there aren’t enough jobs to go around, the people at the front of the line get hired and the people at the back of the line don’t,” Mason said. Historically, this includes Black Americans, women, and less educated workers. Mason notes we also need to improve childcare to get women back in the labor market, as care disproportionately falls on women.

Read the original article on Business Insider