Supplement hurts hospitality firms’ efforts to hire workers
Aaron Lyons, founder and chief executive of Dish Society, a Houston chain with five restaurants from downtown to Katy, sent his workers home when the coronavirus pandemic forced businesses to close in March.
By May, as things were starting to slowly reopen, he was ready to call many of them back. It wasn’t easy. The $600-a-week in supplemental unemployment benefits provided by the Coronavirus Aid, Relief and Economic Security, or CARES, Act was more than many were making at the restaurants.
“I think that was keeping a lot of people at home, and rightfully so,” Lyons said.
“Do I think that certain people took advantage of it? Absolutely. But there were a lot of people that needed it.”
Lyons is among many employers who said the generous benefits made it hard for them to lure workers back in May and June, before the virus had a resurgence and hiring efforts slackened as demand for their services once again receded.
Those concerns are at the heart of the debate as Congress takes up an extension of the Cares Act, the initial $2 trillion economic relief package intended to mitigate the pandemic’s financial toll. State unemployment benefits offer just a fraction of what workers would make on the job, while the pandemic relief package landed workers an additional $600. That benefit, unless renewed by Congress, is set to expire on Saturday.
Renewing the $600 per week benefit is on the table, but Republican lawmakers have been pushing for scaling back the benefit, reportedly to either $200 a week or $400 a month. As of Thursday, the Republican caucus had not reached agreement on unemployment benefits or started negotiating with Democrats.
At the heart of the Republican concern over the payments is the feeling that at a certain level they become a disincentive to return to work. That has been the experience of Lyons and many others in Texas, including Tim McDiarmid, owner of The Good Kind in San Antonio.
She said most of her hourly staff opted to continue collecting when she reopened in May. The $600 a week benefit is the main obstacle to hiring hourly staff, she said.
“We can’t compete with that,” she said, noting she’s operating in the red as it is.
Bills to pay
Bradley Toubman, a bartender at Dish Society in the Heights, was one of the workers who found the $600 weekly unemployment check hard to pass up. It was more than she was making at the restaurant and it gave her the cushion she needed to care for her 11-month old son while daycare access was spotty. The money also enabled her to tuck funds away for her return to work this week, taking half the hours she had before the pandemic.
“It’s something you really have to overthink and overthink,” she said of balancing the money she received from the government against the risks and benefits of returning to work. “It’s really hard to find that balance, of will I be safe; will my son be safe in daycare. But for me it’s just me and my son, so I gotta make some money.”
Texas workers risk losing unemployment benefits if they refuse to return to work, except in very limited situations related to
COVID-19. Reasonable reasons to refuse work, the Texas Workforce Commission has said, include being 65 years of age or older and caring for a child if no other child care options are available. Other acceptable reasons are health related and include, among other things, having been diagnosed with or living with someone who had been diagnosed with COVID-19 and living in a household with a high-risk person.
Sue Burnett, president of Burnett Specialists, a large Houstonbased staffing company, noticed it’s been more difficult for her team to get temps for clients.
“When we’re doing the calls, if they’re not on unemployment they’re happy to take the jobs,” she said. “If they are, we are definitely seeing a pushback.”
It makes sense that her placement team is seeing that from would-be workers, she said, “because they’re making more in unemployment right now.” Temp jobs tend to pay on the lower end, she said, of between $10 and $25 an hour.
“We have, in Texas, one of the lowest minimum wages in the country,” said Jay Malone, political director for the Texas Gulf Coast Area Labor Federation. “If you’re paying $7.35 an hour to risk their life, that’s a big problem and I think that people are justified in being concerned. Workers are really stepping up and advocating for themselves in this moment.”
Some employers, such as HE-B, rolled out enhanced employment incentives during the pandemic. Grocery stores have seen the sales boost to back that up — food store sales for the last six months are up 13 percent over last year, according to the U.S. Commerce Department. Food and beverage service sales fell 23 percent in the same period.
Taking chances
McDiarmid said she was able to hire one new employee out of unemployment. Scott Jacobsen, now her director of sales, said he’d been furloughed from his job with the PGA Tour and was able to collect more in the six weeks he was unemployed than he would have while he was working.
But he knew the enhanced employment benefits wouldn’t last, he said, and he didn’t want to depend on them. More importantly, he said he wanted to pre-empt the flood of applicants competing against him for jobs once the benefits run out.
“I tried to look at it as a longterm — this is not going to last forever. I have a family and I have to think about what our future is going to look like. My wife and I just bought a new house,” he said. “It was one of those things, where I can’t just sit and wait.”
Chris Milton, CEO at The Toasted Yolk, said the company hired more than 100 people since March in order to staff new shops in Fulshear and Cypress. When searching for managers to put on salary, he said the hiring pool was deep. Not so with hourly staff.
Application volume for hourly employees dropped off during the pandemic by between 40 percent and 50 percent, he said, citing new unemployment-related incentives as well as general fear of exposure and reluctance to wear masks for hours on-end.
“Normally you’ll get a flood of applicants,” Milton said of opening new locations. But this time, he said the company resorted to old school recruiting, scouting out talent at other restaurants and offering their employees better hours.
“You definitely had to get creative outside of just waiting for someone walking through the door,” he said.