The pandemic has hit the restaurant industry hard in the United States. More than 110,000 American restaurants have either permanently or long-term closed following last year’s pandemic – with nearly 2.5 million jobs lost from pre-pandemic levels, according to the National Restaurant Association.
But business is picking up.
As people emerge from lockdowns during the pandemic, they are looking to get out and eat again. Total sales in restaurants and bars reached $67.3 billion in May, surpassing $66.2 billion in February of last year, according to census data analyzed by the National Restaurant Association. (When adjusted for inflation, this number is about 3% lower than pre-pandemic levels.)
But the leisure and hospitality sector is also facing a labor shortage. In May, 186,000 jobs were created in food services and drinking places, according to the US Bureau of Labor Statistics, meaning employment in the sector is still down 12% from pre-pandemic levels.
So why the lack of restaurant workers? The reasons are pandemic-related, from slow hiring to fears over the coronavirus. The shortage is pushing restaurants, from mom-and-pop stores to big chains like McDonald’s, to offer higher wages and bonuses that will keep workers coming back.
Does automation play a role?
With today’s labor challenges, restaurants are doing more with less. During the pandemic, every restaurant had to go online in some form, whether it was launching a website or working with food delivery apps. These commands did not require waiters, waiters, or dishwashers to complete. “That’s part of the reason why you might get away with fewer workers,” says Forrester analyst Sucharita Kodali.
The recent divergence between employment and income figures reflects the shift from retail to e-commerce, where retailers have easily transitioned to e-commerce, writes Daniel Zhao, an economist at job site Glassdoor, in an e-mail. mail. It’s not yet clear whether employers in the restaurant industry are turning to more automation to address labor shortages. “If takeout and delivery orders decline as Americans go out to eat more, it will be difficult for employers to rely on automation rather than in-house staffing,” he says.
Economists say we’ll have to wait and see how restaurants adapt to the post-pandemic new normal to understand if automation is increasing.
Restaurant workers are gaining influence, for now
There is the question of whether restaurant employment will return to pre-pandemic levels. Hotel and restaurant workers are stop at the highest rate on record, suggesting that some workers are moving on to better jobs. “There may be a lower number of permanently available workers in restaurants, as workers who left the industry during the pandemic decide to move to greener pastures,” Zhao says.
But workers’ influence may be short-lived, says Heidi Shierholz, an economist at the Economic Policy Institute, a left-wing think tank. While some employers are raising wages, others are offering one-time bonuses, a signal that companies — balancing pent-up demand with a shortage of workers — perceive the labor shortage as a temporary problem. Signing bonuses have almost doubled since last May, according to data from Indeed. She argues that wage growth is about the same as it would have been had the recession not occurred.
“To the extent that there are shortages right now, shifting the power to the workers, allowing them to be a little more demanding, but we are coming out of this recession quickly, as if things are going back to normal, and there is no There’s nothing that has permanently changed the workers’ status vis-a-vis their employers,” says Shierholz. Most employment earnings in May were in restaurants and bars.
For workers to secure lasting bargaining power, policies will need to change, such as passing a $15 federal minimum wage or the PRO law, which would boost union participation, Shierholz says. “You’re not going to undo four decades of policies that shifted power to employers with a very temporary increase in labor demand,” she says.