Low pay and ‘toxic’ workplaces are driving workers away from restaurants

On a typical week in pre-pandemic times, about 15 people would walk into one of Patrick Whalen’s casual elegant restaurants seeking a job in the kitchen.

From Jan. 1 to April 15 of this year, a total of 15 people sought back-of-the-house positions at Tempest, Whalen’s highly acclaimed Charleston, South Carolina, seafood restaurant that landed “Best New Restaurant” accolades in USA Today.

“It wasn’t a shortage, it was a drought,” said Whalen, owner and chief executive officer of North Carolina-based 5th Street Group, which operates a handful of restaurants in the Southeast.

Tales of worker scarcity in the food and hospitality business have grown in volume in recent weeks as restrictions are loosening and an increasing number of restless, vaccinated patrons are opting to dine out instead of DoorDashing-in.

On paper, such a supply-demand imbalance seems like a head-scratcher. The pandemic leveled the hospitality industry, causing the restaurant sector to lose 2.5 million workers, according to the National Restaurant Association. And as of March, food-service unemployment rates remain nearly double that of the national average, federal labor data show.

While some have placed the blame on higher and extended unemployment benefits, restaurant workers, their advocates and restaurateurs like Whalen say the pandemic has exposed deeper, systemic problems within the industry — notably low wages and poor working conditions.

“This is not a worker shortage, this is a wage shortage,” said Saru Jayaraman, director of the Food Labor Research Center at the University of California-Berkeley and president of One Fair Wage, an advocacy group pushing to raise the subminimum wage for tipped workers.

“The restaurant business, inherently and pre-covid, was a toxic workplace,” Whalen said. “You had an enormous wage gap between the back of the house and front of the house; rampant alcohol and drug problems; harassment issues; you’ve got people living in or near poverty working hourly jobs with no guarantees.”

When the industry collapsed, the pandemic merely amplified the pre-existing conditions, he said.

“How many times are you going to go back to something that hurts you?” he said.

After Alicia Macklin, who has an 11-year-old and a 2-year-old child, lost her job of seven years as bartender at a Spokane, Washington, night club, finding another hospitality job was not a viable option.

“For me, it was like, ‘I can’t make minimum wage, I have to make double,” she said, noting her childcare costs can range from $900 to $1,200 a month. “The wage needs to become livable.”

For many years, the club work was ideal. She’d bring in $300 to $350 on good nights and double that on special occasions such as Pride. Macklin’s spouse worked during the day and could care for the kids at night.

During the pandemic, night clubs and some bars went dormant amid social gathering restrictions. Schools went virtual and, later, Macklin also joined the ranks of pandemic divorcees.

She put her focus on pursuing a legal career, completed an application for law school, and, two weeks ago, landed a job as a legal assistant in Seattle.

“For those that don’t have a fallback like I do, they’re stranded,” she said.

When Dominique Brown was laid off from her restaurant job in March 2020, she felt disposable.

“I think it’s the realization of millions of people across the industry saying ‘We’re not going to put up with the bare minimum anymore,'” said Brown, who left the restaurant industry after getting laid off in March 2020. “We are worthy to be paid a respectable wage.”

Brown, who now works as a full-time concierge in property management at an apartment building, received a small emergency living expenses grant from One Fair Wage, and has since served as a member-speaker for the organization, sharing her experience and story.

The jobs restaurant workers did before have changed, as has the world around them, and wages should reflect that, said Heidi Shierholz, director of policy at the left-leaning Economic Policy Institute.

“When restaurants post jobs, they are posting jobs right now that are just inherently harder, more stressful than they were before [the Covid-19 pandemic],” Shierholz said. “They have to deal with anti-maskers, much more disinfecting and sanitation requirements, and they’re actually riskier jobs than they used to be.”

That being said, Shierholz isn’t yet convinced that a true labor shortage has taken hold in restaurants and other sectors. Data such as hours worked and wage growth don’t yet reflect that.

Businesses that say they have a hard time finding the workers they need, should really include the qualifier, “at the wages I want to pay,” Sheirholz said.

Expecting to pay the same wages ignores the Covid-19 realities, she said, noting health and safety concerns as well as ongoing childcare needs.

For some businesses, especially mom-and-pop shops like Black Cat Bake Shop in Missoula, Montana, there’s a ceiling to how much they can raise wages, said co-owner Christy Wich, who runs the bakery with her husband, Jack. Considering margins are as thin as pasty flakes, any increases in expenses would have to get passed along to the customers, she said.

And in Montana, a $6 cinnamon roll just wouldn’t fly, she added.

Black Cat did increase its wages for its open jobs to $10.50 and $11.50 an hour, which are above Montana’s minimum wage of $8.65, but has still struggled to find workers, a challenge that was first reported by the Missoulian newspaper.

“The public wants to support us, they want those items, but we don’t have the workforce, the hands to make all of that,” she told CNN Business.

Wich said she’s hopeful that Governor Greg Gianforte’s recent decision to remove the state from the federal unemployment program of extended benefits will help to push more people back into the workforce.

5th Street Group’s Whalen has taken a unique approach to trying to solve worker shortages and ease low-wage concerns.

Last month, 5th Street Group announced a guaranteed minimum wage of $15 per hour and established the “Tip the Kitchen Initiative,” which adds a second line on the receipt to give patrons the opportunity to also toss some cash to the back-of-the-house staff. In 19 days, the second tip line amounted to nearly $40,000 for 5th Street’s kitchen workers.

“One of my big regrets in life is that we didn’t think of this way, way sooner,” he said.

The moves have been good for business, too, Whalen said.

Last week, 20 job-seekers came through Tempest’s doors. His restaurants are fully staffed.