Tipping point: Labor shortage ushers in a restaurant reckoning
As health and safety regulations ease across the United States, many diners will be disappointed to learn restaurants still have long waits and staff shortages, suggesting that the pandemic was only one part of the labor problem in the hospitality business.
“There’s a bad taste in a lot of people’s mouths who have been in this business,” explains Dean Kitagawa, owner of Wood Street Pizza in Philadelphia, Pennsylvania.
The restaurant business has always been a place for transient employees. Pay comes in the tenuous form of tips, with a sub-minimum wage and no health benefits. The hours can be brutal, and that’s before you even discuss how taxing customers can sometimes be. So it’s no surprise that so many have decided not to return to an industry that has never truly respected them, and with its roots in slavery, who could blame them?
According to the U.S. Chamber of Commerce, “the leisure and hospitality and retail industries have had the highest quit rates since November 2020, consistently above 4.5%.” They also have some of the highest hiring rates.
Despite losing 1 million workers in November 2021, the hospitality industry managed to gain 1.2 million that same month. High turnover could indicate a problem with the industry as a whole and not the laborers. In more stable, high-paying industries, the quit rate is much lower.
How are business owners responding?
Business owners like Dean Kitagawa have to be creative when it comes to keeping employees. Kitagawa takes care of his back-of-house staff by reducing their hours to a traditional full-time schedule of 35-40 hours. Typically, in the restaurant industry, a cook can be expected to work a minimum of 60 to 70 hours. He wants his employees to be able to pursue other opportunities.
“What I’m able to do,” explains Kitagawa, “is offer them a livable wage and give them enough time off that they can pursue their own business.” His model is simple: every time he hires a cook, they become a teacher so that when they do move on to other ventures, they’ve successfully trained a replacement.
Kitagawa ensures a never-ending cycle of qualified employees who have the freedom to pursue their longterm goals. Under his model, employees typically work for him for a minimum of three years. Of his current staff, 80% were with him pre-pandemic. Kitagawa is a unique business owner in that he accounts for the impermanent nature of the restaurant industry.
Danielle Jones, who owns the Abenaki Trail Restaurant and Pub in North Conway, NH, takes her staff on multiple vacations a year, including a $2,000 per person domestic trip and a $10,000 staff cruise. While her approach may differ from Kitagawa’s, they both have respect and appreciation for employees that is not a
built-in part of their industry.
A trip to tipping’s past
Tipping has been linked to racial discrimination since the Reconstruction Era, so it’s no surprise that 2.2 million Americans have left this industry since 2020.
After the Civil War, employers looked for loopholes to avoid paying their formerly enslaved workforce. The Pullman Company gained notoriety by hiring newly freed Black men as porters.
Instead of paying them a wage, founder George Pullman forced them to rely on tips from their white clientele to make up for the pittance he offered them. “Tipping further entrenched a unique and often racialized class structure in service jobs in which workers must please both customers and employers to earn anything at all,” reports Politico.
When Franklin D. Roosevelt signed into law the first-ever minimum wage in 1938, it did not include tipped employees.
The racial component to tipped labor is two-fold: not only was it created to avoid paying formerly enslaved people, but it also disproportionately affected women and people of color. Studying a well-documented tipping bias, shows that white servers make more than black servers per hour.
Michelle Alexander, the author of The New Jim Crow, reflects upon her own time as a struggling server in a restaurant: “The risk that my race, not the quality of my work, would determine how much I was paid for my services was ever-present.”
“I had no idea that tipping was a legacy of slavery or that racism and sexism had operated to keep women, especially Black women like me, shut out of federal protections for wage labor,” says Alexander.
The pandemic did not improve these conditions. 73% of Black workers reported that their tips decreased once they had to become enforcers of COVID19 safety protocols.
Alexander later notes that “after the Civil War, white business owners, still eager to find ways to steal Black labor, created the idea that tips would replace wages.” If tipping was born out of a racist loophole, shouldn’t we do away with it forever?
Looking ahead to an uncertain future
The National Restaurant Association is optimistic for the future. “The foodservice industry workforce is projected to grow by 400,000 jobs in 2022,” according to their 2022 State of the Restaurant Industry.
By their own estimates, this industry can expect to reach $898-billion in sales this coming year, suggesting there is ample money to pay all restaurant workers a fair wage and eliminate an institution mired in America’s shameful past.
“I think there’s going to be a mass exodus out of this business,” says Kitagawa.
That day of reckoning could be sooner than we think.