A recent BBC report started with a McDonald’s franchise in Medford, Oregon that put a banner up outside its store saying, “Now Hiring 14 & 15 Year Olds.” The Medford franchise is in compliance with the labor laws, so long as those hiring 14-year-olds ensure that the jobs are non-hazardous and the young employees’ hours accommodate schooling. But this push to lower ages demonstrates the paucity of available adults, even with lockdowns lifting.
Further up the job hierarchy, the labor shortage has even meant managerial positions for teenagers or those in their early 20s, as at Layne’s Chicken Fingers.
Tens of thousands of hotels and restaurants shut down during the pandemic, some because ownership went out of business, others on hiatus until conditions allowed a re-open.
This disrupted people’s lives, and those who were sent home from those businesses have determined, in many instances, that they are not going back.
The hospitality industry was known for a high turnover rate in jobs even during the ‘old normal.’ According to the Bureau of Labor Statistics, this sector has an annual turnover rate of 73.8%. Simple arithmetic suggests that is a monthly turnover of above 6% each month.
Even pre-Covid, that was a problem for management. Now, almost all schools around the United States have returned to in-person learning. So dependence on 14 year olds cannot be sustained.
One Solution: Raise Wages
The textbook solution to a labor shortage is to raise wages, and improve other working conditions in ways that amount to a compensation increase. For example, McDonald’s told the BBC that one of the tactics it has employed in addressing its labor shortage has been the offer of back-up child care. The corporate franchisor and its franchisees are working together on the funding of that program.
Understanding “wage” broadly, then, “a shortage of workers at job X” is equivalent to “a shortage of persons willing to work at job X at the prevailing wage.”
For the month of June 2021, wages in the hospitality sector are up 7.1% from June 2020, the highest year-on-year rise in any sector.
But the equilibrium-seeking process takes time, and it may take an especially long time for the hospitality industry right now because there are a number of other factors pinching at firms’ budgets. Tourism remains way down, for example, and that limits the demand for the services of the industry, and that in turn limits the degree to which wages can be increased.
Another Solution: Automation
Once upon a time, before the rise of McDonald’s, there were automats: restaurants where labor costs were kept to a minimum due to customer self-service.
This was a German idea, which Horn & Hardart brought to America. At its peak, Horn & Hardart managed 40 locations in New York City alone, dozens more across the United States, serving hundreds of thousands of customers each day.
Something similar – with the bells and whistles one would expect from the digital era – looks like a possible future for the food industry, though that route will come with its own set of difficulties.
Automation looks like the future for much of the hospitality industry, too.
ReviewPro conducted a poll recently in which it asked hotel managers a simple question: “How important do you consider automation for your hotel’s recovery? Nearly 75% answered “very.”