New employees at one of Ryan Cole’s restaurants could get a $1,000 bonus. And if employees refer a successful hire, they might also get a grand.
Like many restaurant owners, Cole has tried a number of tactics to attract workers as San Francisco reopens and recovers from the COVID-19 pandemic. He has bumped up wages, paying some staff members between $38 and $50 per hour. He’s offering two weeks of paid vacation, and there could be a sizable bonus for some who stick around for a year. Currently, he’s considering providing free dinner for two to those who work all their scheduled shifts over the course of a month.
Cole, the owner of the Hi Neighbor Restaurant Group, has been involved in San Francisco’s restaurant business for about 11 years. While he’s always known there are challenges to workforce retention, and has offered generous benefits to employees as a result, he says he’s never had this much trouble hiring people.
Before the pandemic, he employed upwards of 120 people across his three restaurants and catering company. Now, he employs about 40 people in San Francisco, where he operates two restaurants out of the same kitchen. Each is open only five days a week due to staffing levels, but he hopes to reopen the other two locations this fall.
“The only way to change it is staffing,” he says.
Cole isn’t alone in his struggle. Across San Francisco, many restaurant and bar owners say they’re having a tough time hiring enough people to keep pace with the ongoing economic reopening. Coupled with nationwide supply chain issues, uncertainty around how quickly customers might return and the difficulties that have plagued this industry over the course of the last year, many restaurant and bar owners are concerned about their futures, at least in the short term.
The slow pace of rehiring can be attributed to a number of factors, depending on who you ask. People point to the flight of workers from the expensive Bay Area; the industry’s persistent uncertainty; potential risk of catching the Delta variant; lack of childcare options; and reduced public transit service coupled with rising rideshare prices. Some say higher unemployment benefits could give prospective employees the chance to wait a little longer to jump back into the workforce.
Former employees are likely taking the opportunity to reassess their futures in the restaurant industry, a business that’s notorious for its long hours, tip-based pay and often difficult working conditions.
“The pandemic was a traumatic experience for the entire world, and I think it makes sense that a lot of people are reassessing what they want to spend their time on,” said Sharky Laguana, a small business advocate and a business owner himself.
Referring to this moment as a labor shortage is a misnomer, according to Sylvia Allegretto, a labor economist at the University of California at Berkeley.
A true labor shortage would be an economic situation with an unemployment rate of about 2 to 3 percent, she says. According to the Bureau of Labor Statistics, San Francisco’s unemployment rate as of May 2021 was 5.1 percent, a significant decline from its pandemic peak of 13 percent.
Rather, it’s a crisis of wage, benefits and scheduling freedoms.
We’re in a moment when prospective employees have newfound bargaining power, and they can pick the job they really want as opposed to the first job they’re offered.
“If you sweeten the pot, you’ll start attracting workers,” Allegretto said.
Some local restaurant and bar owners seem open to doing just that, offering higher hourly wages, paying for additional training and taking precautions to make employees feel safe in the workplace.
There’s concern, though, about whether some of these changes will be sustainable after relief money runs out. Most restaurants operate at slim margins, but the infusion of cash from stimulus packages has allowed some of them to make more generous offers in the short-term.
Steps taken at the federal, state and local level to protect more vulnerable workers during the pandemic should be continued post-COVID in order to help bring people back to these jobs, according to Allegretto.
Otherwise, this window of increased negotiating power for workers could be short-lived.
“Those were problems before the pandemic, and they didn’t cease to be problems now that the pandemic is over,” she said of the low wages and little flexibility typical of service jobs. “It seems people now understand that the government can and should be part of the solution.”
Small businesses and neighborhood commercial corridors are an essential part of San Francisco’s economy, but also of what makes it a destination-worthy city that attracts tourists and their dollars.
There’s some worry that should this trend continue unabated, it could possibly slow The City’s recovery, which already lags behind many other urban centers nationwide.
“For a full economic recovery, we need city policy that keeps our streets clean and allows employees to feel safe in the workplace,” San Francisco Chamber of Commerce CEO Rodney Fong said in a statement. “If we can’t address these basic concerns, a full recovery could be delayed considerably.”
Still, many experts and merchants seem confident this is a short-term phenomenon. They say it was always going to be more difficult to ramp up the economy than it was to shut it down.
“I do not think this is going to be a long-term issue for San Francisco,” said Manny Yekutiel, who owns a business in the Mission. “San Francisco is still magical and incredible, and people are going to move here because they want to be here.”