How The Pandemic
Pushed Restaurant Workers Over The Edge
(By Eli
Rosenberg, Washington Post, 24 May 2021)
Jim Conway started working in restaurants in 1982, making
$2.13 an hour, plus tips. And though the
world has changed significantly in the nearly 40 years since then, his hourly
wage has not. At the Olive Garden outside of Pittsburgh where he
worked when the pandemic hit last year, he was making $2.83 an hour, the
minimum wage for tipped workers in Pennsylvania, plus tips. So after being
furloughed for months last spring, Conway, 64, decided to retire.
Being paid the rough equivalent of a chocolate bar an hour
from the chain was little incentive for him to stick it out longer in the
industry after so many years, especially with tips no longer a reliable source
of income and lingering health concerns about covid-19. “The main issue for me was safety,” Conway
said. “There are lots of people who don’t want to participate in the old ways.”
Conway is one of the millions of workers who left the
restaurant industry during the pandemic and haven’t come back. The industry has
1.7 million fewer jobs filled than before the pandemic, despite posting almost
a million job
openings in March, along with hotels, and raising pay 3.6 percent, an average
of 58 cents an hour, in the first three months of 2021.
Restaurant chains and industry groups say a shortage of
workers like Conway is slowing their recovery, as the sector tries to get back
on its feet amid sinking covid cases, falling restrictions and
resurgent demand in many areas around the country.
The issue has quickly become political, with Republicans
blaming the labor crunch on the Biden administration’s move to boost federal
unemployment insurance supplement, which has been a central part of the
government’s response to the pandemic for most of the past year. GOP leaders
and business groups such as the U.S. Chamber of Commerce say the extra
unemployment insurance is a disincentive for some workers to return to work.
In interviews with The Washington Post, 10 current and
former workers expressed a wide range of reasons they are or were reluctant to
return to work. Some, like Conway, have left the industry or changed careers,
saying they felt like the industry was no longer worth the stress and volatility. Others said jobs that didn’t pay enough for
them to make ends meet no longer felt appropriate to them. Others left after
disputes with managers — over issues around safety and pay — and other flash
points that have emerged in the past year.
All described the pandemic as an awakening — realizing that
long-held concerns about the industry were valid, and compounded by the new
health concerns. And forced to stop working or look for other jobs early on in
the pandemic, many realized they had other options. “The staffing issue has actually a lot more
to do with the conditions that the industry was in before covid and people not
wanting to go back to that, knowing what they would be facing with a pandemic
on top of it,” said Crystal Maher, 36, a restaurant worker in Austin, who’s
become more active on the industry’s labor issues in the past year. “People are
forgetting that restaurant workers have actually experienced decades of abuse
and trauma. The pandemic is just the final straw.”
Tonya Breslow, the owner of Mis en Place, a restaurant
staffing firm, said a huge number of restaurants she works with are dealing
with shortages. The firm recently
surveyed 2,000 line cooks and back-of-the-house restaurant workers nationally
and found just over a quarter, 26 percent, reported leaving the industry, while
41 percent of workers said they were still employed in the industry. That left
about a third of respondents who had not gone back to work. Of that group, most workers said they were
not yet back, because they were either looking for the right opportunity, they
had concerns about safety during the pandemic, or they did not plan to return
to the industry.
A turbulent industry
The restaurant industry is famously volatile, home to strong
personalities, tense workplaces, grinding hours and unpredictable scheduling.
Issues like tip and wage theft, sexual harassment, and drug and alcohol abuse can be
widespread, and there is often little in the way of formal job benefits such as
health care, vacation time, sick pay or a livable minimum wage, though many
workers do well in tips during flush times.
Turnover is a way of life; the average job tenure for hourly
food service workers is less than two months, according to data compiled by Mis
en Place. This constant churn was
affecting Jazz Salm’s life even before the pandemic. The 37-year-old had worked for Carrabba’s
Italian Grill, a Florida-headquartered chain, at different locations for more
than 15 years, but said she had to find another job after one of the
restaurants’ outposts, near Miami, burned down.
She got a job at a Chili’s in that area in early March of last year, but
was furloughed when the pandemic shuttered the business after her first week.
It took her months to get approved for unemployment
insurance in Florida, as the state’s system struggled to process the flood of
applications in the early months of the crisis.
By the end of summer, Salm found a job at a Walmart, after moving back
in with her mother in Sarasota. But shortly after starting work there, she
registered a fever during the screening the store administered to workers
before they clocked in, and was sent home to quarantine. The company required a
two-week, quarantine, she said, even though she had tested negative days a few
days before developing the fever.
Walmart pays employees if they’re sent home for failing a health screening, but Salm said she was unaware
of the benefit, and thought she’d have to go two weeks without a paycheck. She decided to quit the job and drive up the
coast to go stay with a friend who had invited her to come live at her house in
Upstate New York. She slept in her car along the way. She said she tried to find a job at a
restaurant but couldn’t. So she started taking care of her friend’s 81-year-old
father-in-law, who had just returned from the hospital after receiving
chemotherapy for throat cancer. The money takes care of her rent, groceries and
some spending money.
She said she may return eventually to the food service
industry in Florida, where restaurant owners have complained vociferously
about the worker shortage, but it will take her time. She won’t be fully
vaccinated until mid-June, for starters. And she wonders about
getting trained and going into medical caregiving full time. “I’m trying to trust the process and hope
that this all works out and there’s not another spike or anything else,” she
said. “The restaurant industry really doesn’t guarantee the money that I used
to make, with this pandemic. Because if it flares up again, or God forbid
something happens in the restaurant, you have to close it down, you’re out of
work for weeks and there’s nothing you can do to make money. Other than find
another job.”
Losing the city’s best
Allan Creasy, 39, had worked in restaurants and bars for
more than two decades, most recently as a bartender at Celtic Crossing, an
Irish bar in Memphis, where he was voted the city’s best bartender three times over the
years by readers of the city’s alt-weekly newspaper, the Memphis Flyer. Like others, Creasy said the
pandemic proved to be the tipping point for him, exacerbating long-standing
labor issues in the industry and drawing attention to how low his wages were:
$2.13 an hour before tips — the minimum wage for tipped positions in Tennessee
and at the federal level.
After three months back at the bar after the initial
lockdown, Creasy decided to quit and pursue a career change. “I didn’t come back to the same job I left
previously,” he said. “It was very difficult to constantly have to police
people about mask-wearing. It was very difficult to try to bartend and run out
to the back parking lot to deliver to-go food, and to deal with Uber Eats
drivers and the like, while making significantly less money than I’d been
making previously.”
And the pay had gotten worse — with his income dropping from
about $60,000 a year around 2011 to less than $40,000 before the pandemic, he
said. “I’ve seen the number of people
who are passionate about the restaurant industry slowly ebb away over the last
20 years,” he said. “In my opinion, it’s because the server’s minimum wage
hasn’t changed. There is this belief that servers and bartenders are
interchangeable.” Creasy, who has a
bachelor’s degree in history, has been doing fundraising and social media work
for a local political action committee since. He’s making about the same amount
of money he did at the bar but doing something that feels closer to his heart
with less risk. “You had so many folks
working in the industry because they loved it, but now so many folks found a
job in a warehouse making $15 an hour, or making as much money driving for Uber
Eats, all these different businesses,” he said. “It’s not that we’re on
unemployment. We did our unemployment stint, and we found something else.”
Nathaniel Santiago, 20, who works at a McDonald’s in the
Fort Lauderdale area in Florida, said he believes the industry’s low wages are
playing a role. He had to move back in
with his parents last year after losing his job at a manufacturing facility,
before finding work at the fast-food chain, where he said he’s making $11 an
hour — just $1,760 per month for full-time work, with no health care. That’s
about $4 an hour below what is estimated to be a living wage for
a single person with no children in that area — the minimum amount calculated
for a person to be able to meet basic standards of living.
He also believes unemployment insurance is playing a role in
the shortage, saying he’s heard from some friends and family members who say
they are happy getting by with support from the government in the meantime. “We need to pay workers $15 an hour at the
moment,” he said. “People want to talk about inflation or that if you pay
everybody $15 an hour, everything is going to get more expensive, but it
already is. Food, clothing, gasoline, rent — you name it.” Peter DeQuattro, 36, a line cook in Memphis
who recently left a job because it paid less than $15 an hour, said he thinks
the pandemic has changed the paradigm for low-wage workers — giving people more
confidence to demand better wages. “There
is a growing movement of people, including myself, that just flat out refuse to
work for somebody that isn’t willing to pay a living wage,” he said.
Companies dangle bonuses, incentives, appetizers
There are signs that businesses are reacting to
the shortage. Companies that
pay less than $15 an hour — the amount many liberal economists and labor
advocates say should be a baseline to provide people with something closer to a
living wage in many areas of the country — are increasingly
dangling incentives, bonuses and pay raises in front of workers in the hopes of
staffing up. Pay is increasing in the industry as well: The median
wage for nonmanagement restaurant and bar workers rose 70 cents an hour, to
$14.50, in the past three months — a significant 5.1 percent jump.
Costco, Chipotle and McDonald’s are among the publicly traded
companies that have announced wage increases in recent weeks, and others, like
Target, raised their wages in 2020 as the pandemic drew more
attention to the plight of workers. Local
media outlets have been flooded with tales of the worker shortage, written
mostly from the perspective of businesses, from Santa Fe to Connecticut. A brewery in Albuquerque is offering workers a
free 64-ounce growler of beer after every shift; Applebees is offering free appetizers to people who apply to jobs, as it
seeks to hire thousands of workers across the country.
Breslow, the owner of the staffing firm Mis en
Place, knows restaurant owners who are offering bonuses as high as
$3,000 to new hires, and others who are adding health insurance and 401(k) benefits
to employee incentive packages.
“The country is scrambling to get that 33 percent,” Breslow said,
referring to those workers who have not returned to the industry. “The leverage
is unreal.”
https://www.washingtonpost.com/business/2021/05/24/restaurant-workers-shortage-pay/
The Perfect Storm Making Everything
You Need More Expensive
(By
Hanna Ziady, CNN Business, 9 June 2021)
Steel, lumber, plastic and fuel. Corn, soybeans, sugar and
sunflower oil. Houses, cars, diapers and toilet paper. Prices are rising almost everywhere you look. The post-pandemic recovery is in full swing and the global
economy is struggling to keep up. Following a collapse at the start of
the pandemic as businesses closed and millions of workers lost jobs, demand has
rebounded with a vengeance, spurred by government stimulus and consumers flush
with savings.
But companies that idled factories or put workers on
furlough during lockdowns are now unable to secure enough raw materials to
build the houses, make the cars or assemble the appliances that are suddenly in
high demand. Companies are furiously
trying to restock inventories following last year's global recession, straining
supply chains already reeling from the pandemic to breaking point. A shortage
of shipping containers and bottlenecks at ports have made matters worse and
increased the cost of moving products around the world. Throw in accidents,
cyberattacks, extreme weather and the huge disruption caused by the desperate
hunt for cleaner sources of energy, and you have a perfect storm.
There's no telling how long demand will outpace supply,
especially as the pandemic continues to rampage through some of the world's
biggest economies. But there have already been shortages of
everything from microchips and chicken to chlorine and cheese, and prices are
spiking.
The big question is whether shortages and price hikes are
temporary byproducts of the pandemic, or if the global economy is changing in
ways that could permanently hike the cost of doing business and usher in a new
era of inflation. The answer has huge implications for workers, investors, companies
and governments.
What is certain is that, for now at least, inflation is back
and it's widespread. Inflation in
countries that belong to the Organization for Economic Cooperation and
Development surged in April to the highest level since 2008. Energy price hikes boosted
average annual inflation across OECD countries to 3.3%. But prices are rising
even when volatile food and energy costs are excluded.
How did we get here?
With US gasoline prices at a seven-year high, it's easy to
forget that oil futures crashed last year. Brent crude, the global benchmark,
briefly plunged below $20 a barrel last April, as coronavirus lockdowns
cratered demand from airlines, motorists and manufacturers. Brent has since shot up to over $70 a barrel
on a dramatic turnaround in demand. US oil hit $70 a barrel on Sunday for the
first time in nearly three years. A similar phenomenon is playing out across a
host of commodities, industries and products.
"We've never really had anything quite that violent and rapid, both
in terms of the change down and the change back up," said George Calhoun,
director of the quantitative finance program at the Stevens Institute of
Technology in New Jersey. "It's clear that [the economic rebound] created
a lot of disruptions, not just in supply chains, but in business models."
Take the auto industry, a prime example of how the events of
the past year have upended supply chains, changed consumer behavior and are now
fueling price pressures. The pandemic
temporarily shuttered car factories last year, while the recession that
followed torpedoed sales. When automakers responded by cutting back vehicle
production and thus orders for microchips, semiconductor manufacturers
reassigned spare capacity to companies making smartphones, laptops and gaming
devices — products in high demand from housebound consumers.
Then, when car sales bounced back faster than expected,
manufacturers found themselves at the back of the line for chips. Widespread
shortages have forced the likes of Ford (F), Volkswagen (VLKAF), Fiat
Chrysler (FCAU) and Nissan (NSANF) to
slash production and idle plants in some cases.
That has pushed the price of new cars higher and boosted demand for used
vehicles, which are now one of the main sources of inflation in the United
States. Rental car companies,
which sold thousands of vehicles early on in the pandemic to
shore up their finances, are adding to the crush of demand and holding on to
stock that would otherwise have been put up for sale. At the same time, stimulus checks and low
interest rates have made vehicle purchases more accessible to households, many
of which want to avoid public transportation and carpooling during the
pandemic.
The price of used cars and trucks in the United States
jumped 10% over the previous month in April — the biggest increase
since 1953, according to the Bureau of Labor Statistics. Prices were up 21%
compared with a year earlier, making used cars the primary driver of April's
surge in US consumer prices. "Demand
continues to exceed supply for new vehicles and we expect this to continue
through 2021, in part due to the production disruption," Mike Jackson, the
CEO of AutoNation (AN),
one of America's biggest car dealers, said on an earnings call with analysts in
April. "More important though,
interest rates and consumer preference for vehicle ownership versus ride share
and public transportation are supporting demand," he added.
"Americans want individual transportation."
Commodity prices surge
As the pandemic recovery takes hold, the cost of raw
materials needed to produce consumer goods and power vast infrastructure
spending in China is soaring. US President Joe Biden's infrastructure proposal
would only increase demand if approved by Congress. Booming investment into green technologies is
also adding to strong demand for metals such as aluminum and copper, which are
used in electric vehicles. Tesla (TSLA) recently
added $2,000 to the price of its Model 3. CEO Elon Musk blamed rising raw materials costs. Iron ore, copper and steel, used to make
cars, houses and electrical appliances, have hit record price levels in recent
weeks. The Bloomberg Commodity Spot Index, which tracks price changes across a
range of metals and agricultural commodities, has jumped roughly 60% over the
past year.
In Shanghai, the price of rebar, a type of steel used to
reinforce concrete, has fallen from record levels in May but is still 16% more
expensive than at the end of last year. Rising
costs have pushed producer price inflation in China to its highest level
in nearly 13 years. The country's producer price index — which measures the
cost of goods sold to businesses — soared 9% in May from a year ago, according
to government data released Wednesday. In
the United States, lumber shortages tied to sawmill shutdowns earlier on in the
pandemic have spiked prices, adding nearly $36,000 to the price of an average
new home, according to an analysis by the National Association of Home Builders
Association.
It's not just the construction sector that's feeling the
heat. The rising costs of resin and pulp, for example, are
prompting Procter & Gamble (PG) and Kimberly-Clark (KMB) to increase the prices of household staples such as
tampons, diapers and toilet paper. A
growing list of crises on the supply side has exacerbated the commodities
crunch. The Suez Canal blockage delayed goods shipments in March.
Drought in South America has weighed on corn and sugar output. A deep freeze in Texas and the Colonial Pipeline
ransomware attack tightened the market for plastic and fuel, while India's Covid-19 outbreak disrupted ports
and supply chains. "It's really
been a perfect storm," said Warren Patterson, head of commodities strategy
at ING.
The latest problem: JBS Meat, a major beef and pork producer,
suffered a cyberattack that forced the company to shut down plants in North
America and Australia last week. Factories have since come back online but the
disruption could cause wholesale meat prices to jump, analysts said. Food prices are already rising due to a surge
in demand for agricultural commodities such as corn and soybeans driven by
China, where demand for animal feed is soaring as hog herds recover from
an African swine fever outbreak, according to Patterson. The
government has also been rebuilding depleted domestic corn reserves, he added.
On the supply side, dry weather in Brazil, Thailand and
Europe has weighed on crop yields, while Russia, the world's leading wheat
exporter, has implemented an export tax to bolster domestic supplies and cool
prices. Global food prices rose for a
twelfth consecutive month in May and at their fastest monthly rate in more than
a decade, according to the UN Food and Agriculture Organization. The FAO Food
Price Index, which tracks a wide range of products, was nearly 40% higher last
month than its level a year ago.
While the cost of raw ingredients accounts for a small
portion of the price that consumers pay for goods in supermarkets and
restaurants, food companies such as Nestlé (NSRGY) and Unilever (UL) have
already announced price increases on certain product lines in response to
commodity inflation. An increase in
supply could ease prices gains, particularly because at these levels there is
strong incentive for farmers to plant more crops, Patterson said. In other
words, the trend could be temporary. "The
move we've seen across most commodities is part of the usual recovery, a cyclical
uplift," he added. "As we see the global economy normalize, once
we've recovered, demand will ease off and I expect prices to. I'm not of the
view that we're in a commodities super cycle."
Logistics and labor costs climb
Commodities are not the only factor driving prices higher,
however. Logistics and labor costs have
also increased and a shortage of workers in some industries could intensify
pressure on companies to raise wages even further. "When it comes to the economy we're
building, rising wages aren't a bug; they're a feature," Biden said in
a speech during a recent visit to Cleveland, Ohio. Labor shortages, which have also become a
problem in Europe, are partly related to the speed at which economies reopened
and are likely to normalize once welfare payments dry up, stimulus checks have
been spent and workers in sectors such as hospitality and travel feel more
confident that businesses won't be forced to shut again, said Andrew
Kenningham, chief Europe economist at Capital Economics.
But that's little consolation to companies trying to get
products out the door. For Whirlpool (WHR),
which makes washing machines, fridges and ovens, the rising cost of
commodities, labor and logistics has led to several rounds of price increases. "That's the only way to mitigate
significant cost inflation," CEO Marc Bitzer said in an interview with
Bloomberg Television last month. "There is talk or hope that this is a temporary
blip. We see it elevated for a sustained period," he added. Supply chain constraints have forced the
company to make products based on the goods it has available rather than on
customer orders. "That is anything but efficient or normal but that's how
you have to run it right now," Bitzer said. "The supply chain is
pretty much upside down."
In Germany, the industrial heart of Europe, supply chain
disruptions exacerbated by the Suez Canal blockage offer one possible
explanation for an unexpected drop in industrial orders in April, according to
Carsten Brzeski, head of research at ING.
A growing list of companies around the world have flagged higher supply
chain costs — from engine manufacturer Cummins (CMI) to
exercise equipment maker Peloton (PTON) —
partly driven by soaring shipping charges, which have made it much more
expensive to move goods. If demand remains elevated, more firms may opt to pass
these costs on to customers.
The Logistics Managers' Index, a US economic indicator,
attests to rising cost pressures in supply chains. The monthly gauge asks
corporate supply chiefs where they see future expenses relating to inventory,
transportation and warehousing. In May, respondents predicted that over the next 12 months
costs across all three categories would experience their highest increase in
the nearly 5-year history of the index.
The end of easy choices
With price hikes apparent on store shelves and in official
data, inflation expectations among businesses and consumers are rising,
according to various surveys. That in itself poses a challenge. If businesses
and consumers think that higher prices are here to stay, they may change their
behaviors in ways that cause price pressures to persist. For example, workers might demand higher
wages, forcing companies to increase the price of their goods and placing
additional upward pressure on salaries.
At least for now, central bankers are of the view that price
hikes will prove transient and are unlikely to lead to persistently higher
inflation — even as some economists including former US Treasury
Secretary Larry Summers and former Bank of England
governor Mervyn King sound the alarm. "Neglecting inflation leaves global
economies sitting on a time bomb," Deutsche Bank economists warned in a
research note this week. If central banks wait too long to raise interest rates
they will be forced into "abrupt" policy changes, causing significant
disruption to markets and the economy, they argued.
Yet Federal Reserve officials remain sanguine.
"Although continued vigilance is warranted, the inflation and employment
data thus far appear to reflect a temporary misalignment of supply and demand
that should fade over time as the demand surge normalizes, reopening is
completed, and supply adapts to the post-pandemic new normal," Lael
Brainard, a Federal Reserve governor said in a speech last week.
Policymakers in the United States and Europe are "looking
through" upward pressure on prices and "basing monetary policy
decisions on where they think inflation will be in two years' time rather than
in the next six to 12 months," said Kenningham of Capital Economics.
Still, whereas a year ago concerns centered on deflation,
the risks now are "much more balanced and possibly tilted to the upside in
some cases," Kenningham told CNN Business.
"The risks of inflation rising on a sustained basis are much higher
in the United States than in Europe," he added, pointing to far more
generous financial support for US households, which has propped up income and
helped boost savings to levels not seen in more than 70 years. "In brief," wrote the Deutsche Bank
economists, "the easy policy decisions of the disinflationary 1980-2020
period appear to be behind us."
https://www.cnn.com/2021/06/09/business/rising-prices-inventories-post-pandemic/index.html
