Seeing the link between wages and workers, more and more companies are raising the former to attack the latter

As businesses emerge from COVID-19 lockdowns, many face the challenge of too few workers to meet high demand. And while the labor shortage is not new, it is certainly a worsening sore point for many.

And amid a booming labor market, some economists argue that the shortage is not related to labor, but rather wages – a third economic rail that businesses large and small have increasingly seized to deal with widespread labor shortages.

Yet the strategy of raising wages, which can be risky given the higher costs that can be passed on to consumers, is particularly perilous for small businesses which often lack pricing power.

The data does not return to restaurant jobs in states that have UI benefits. About half of U.S. states have made the move, or will soon be doing so, to encourage workers to fill record vacancies.

Yet the fear of contracting COVID-19 remains a major factor, with around 54% of workers leaving the industry for this concern, according to the One Fair Wage study.

“The data shows that in fact, they don’t want to come back because they say the advice is unreliable, the health risks are too high and most importantly, [they] I no longer want to work for minimum wage, ”said Saru Jayaraman, president of One Fair Wage.

The list of companies paying more is growing

Of course, there is a link between unemployment and unemployment assistance during a pandemic. April data shows that 25 states planning to cancel early benefits have recovered about 80% of jobs lost during the crisis, compared to a recovery rate of 66% for the rest of the country.

However, an additional 2.4 million people in states that interrupted insurance benefits prematurely are either unemployed or no longer looking for work, which portends a slower hiring cycle going forward.

The story continues

Meanwhile, the labor shortage has reached “crisis” levels – particularly in the service sector, where independent businesses and restaurants – criticized by COVID-related closures – continue to struggle to find workers, even with the underlying recovery.

There is no doubt that some industries are struggling to fill vacancies as the economy slowly reopens. But in the restaurant industry, other constraints prevent workers from re-entering the labor market.

Homeowners have attributed the shortage to various factors, although they dispute the idea that workers would rather stay on UI rather than return to work.

Increasingly, observers and worker advocates are pointing out that low wages are to blame for the work pressures restaurants face. In response, a growing number of food and consumer giants like (), Walmart (), Amazon () and McDonald’s () are trying to attract workers.

The fight for higher wages in restaurants has been exacerbated by the pandemic. Workers have long called for an increase in the federal minimum wage to at least $ 15 an hour, from the $ 7.25 currently approved by.

For many workers who are trying to get by, this is a problem.

In a virtual panel discussion Tuesday with restaurateurs and industry experts, Ryan Lowe – owner of Ore House in Durango, Colorado – said his restaurant has responded to the changing landscape by raising wages.

“We have raised our wage below the minimum to the minimum wage required by Colorado,” Lowe said. He also added a “whole team tip pool,” where all of his employees received the same pay.

“The dishwasher should be as valuable as the person hosting it at the front door as the waiter,” he added.

Lowe noted that by changing wages, they saw workers earning an average of $ 30 an hour by sharing tips equally.

Organizations like One Fair Wage and RAISE: High Roads Kitchen offer to guide restaurants by raising the wages of workers, including.

Opponents of minimum wage increases say the costs are ultimately passed on to the average consumer. Lowe, however, insisted it could work for everyone.

“The ability to raise the salaries of everyone in our collective team, it works, it’s different, but it works,” Lowe added.