09 May From the comments, on restaurant labor and UI
I own a restaurant and bar in a rural community in western Washington. Our state minimum wage is currently $13.69 per hour which is what we pay our tipped front of the house employees. After tips these employees are making $25 to $35 per hour. Not bad for a job that requires no formal training.
We start our back of the house cooks at $17 hour and up. For full time employees we also offer health insurance.
We are still having major problems finding employees. I have ads for employees that get zero responses. I am not alone in this. Everyone in our area from Costco, to Walmart, to all of the construction companies which pay very well can’t find help. In all my years I have never experienced a labor market like this.
My anecdotal experience from talking with local individuals is that they are enjoying the paid time off and have no plans to come back until the bennies run out.
For those of you who think you can just pay more and raise prices by a nickel, you are out of touch. As a point of reference, in 2020 the minimum wage increased from $12 hour to $13.50. The increase in costs to my business based on 2019 hours was over $65,000 which is most of my profit. Then covid hit.
Finally, keep in mind that most restaurant workers are not going to learn to code. I’ve have had recovering drug addicts, felons, and people with other social and mental disorders work for us. The restaurant business is an opportunity for many people at the margins of society to be productive and to get their lives together. We give them structure, training, and a paycheck. But the big question is how can you pay someone $15 hour who is only giving you $7 of value? In the long run you can’t.
The current policies of paying people not to work in the long run is going to hurt a lot of small businesses and more importantly, a lot of people in the margins of society.
And Slocum chimes in:
Everyone commenting here and every restaurant owner out there facing labor shortages is perfectly aware that if they raise wages high enough, they’ll get all the applicants they could ever want.
But some of the commenters here (and restaurant owners themselves) also know that restaurant profit margins are not large and that they have limited pricing power because restaurant meals are highly elastic, and that as restaurants raise prices, their customers will come less frequently and buy less when they do come. They also know that wages are sticky — that when the pandemic UI ends, they won’t be able to simply reduce wages back to previous levels without having a big impact on employee morale.
And as a business owner, just how big a bidding war would you want to get into just to be able to bribe the least ambitious prospects into getting off their couches?
Here is the link to the comments.
Read the Full Article here: >Marginal Revolution