Unintended consequences. The government has given out additional unemployment $$ and addl. weeks of eligibility plus child credits and payments, but rather than seeing that as extra money to get a leg up, an entire swath of the population sees it as a chance to not have to work.
@hawaiiboy Is that true or are they simply making rational decisions by comparing what they would earn by working full-time vs what they get as part of unemployment benefits?
@pratik I've heard enough stories from people to know it's true. The Government support almost matches their previous income. Rather than seeing it as a chance to improve their quality of life or put money away, they are making a conscience decision to not work. This is primarily hospitality and service workers here in Hawaii who are the largest employers. I had people who we call to work tell us, I’m making enough money, I’ll just stay home a while longer or till it runs out.
@hawaiiboy From what I have heard too, the hospitality business ought to increase the pay to service workers that incentivizes them to work.
@pratik I sense there’s also a certain amount of; people have been “not working" for so long, they almost forgot how to get back to it.
@hawaiiboy After 2020, there's going to be a realignment be in in form of pay, incentive, mode of working, etc. In our field too, we are seeing people's preferences of where they want to work change. Employers/businesses will have to adapt too. Maybe people now value other things like time with their family, less commuting time, etc. and may be willing to live on less money than what they made before. One thing is sure - things are not going back to as they were in 2019.
@hawaiiboy I would argue that that was an intended consequence. Public health policy during a pandemic should largely be: “Stay home, stay away from people. If you can’t do those things and still make a living, the government will make that possible on a temporary basis with unemployment pay.”
@mjdescy That was the plan, but there doesn't seem to be a plan to transition back to a functioning economy. Businesses can open to a certain degree and customers are coming out, but we don't have the staffing to serve them. We’re stalling by offering less seating, etc, but something needs to give.
@pratik sounds about right. I think there also be a forced realignment of customer expectations in light of the service industries new challenges.
@hawaiiboy This is interesting. There’s an underlying assumption at play here: The idea that it’s simply immoral to choose to not work when you can get more money to not work. It’s critical to realize that this is an assumption, not automatically true.
Businesses don’t have an automatic right to people’s labor, and this arrangement has allowed many folks to assert that fact, rather than being forced to take whatever lower wages are on offer. That’s offending a lot of people who have the assumption “you better work otherwise you’re bad”.
Let’s have a societal discussion instead about whether a business deserves to be a business if it can’t provide the wages that are being demanded for the labor it’s using.
@joshbrez Good points. This is a long post to offer my long view, 40+ years in hospitality. I can only speak to this industry.
I’m old enough to remember when food cost was the biggest expense. restaurants bought mostly raw ingredients and had an army of cooks to prepare everything. In the mid 80s, labor cost became the largest expense while food technology advanced, so there was a switch to pre-prepared foods and less staff. in Hawaii we have compulsory healthcare for employees over 20 hours/week, that and other employment taxes multiply on top of wages.
Restaurant margins are tight and the market will only bear a certain price level per the restaurant concept and the geographic location. I think restaurants are pinched between the realities of running one and society’s current shift. Everyone wants to eat out, at a fair price but do not realize that someone has to pay for what is now called a “living wage”. The restaurant that I manage is part of a group of 25, all but 2 in Hawaii. We’ve inched up wages, but have gone long on benefit. We have tip sharing with the BOH (a rare thing in the industry), a 401K for all, meal credit, discounts for family members, clean well maintained restaurant and few other things.
If you look at the hotel side of the industry, they are union driven, the unions are focusing more on adding benefits than increasing wages. I managed in many places where FOH staff made minimum wage, but took home $200/night in tips. This also needs to figured into the equation.
A restaurant is the only business where you take raw ingredients in the back door, manufacture the product on site and market and sell it to the end user in the same process. There are chef's that are good at the back end, but can't sell or build relationships with customers and floor managers that are good at marketing and relationships, but can't cook. If you've never managed one “soup to nuts”, it's hard to fully understand what goes into it. It's not a definable as retail or manufacturing a product. That's why 80% fail in the first 5 years.
If this is where we are going, many restaurants will just go away, many already have, based on the economic model of the past 50+ years. The restaurants that survive will be the high end, where menu price has no limit and the low end that can pay more, but run with minimal staff and offer minimal service. The middle will get squeezed out.
A bar or pub may be better off, liquor has higher margins, but in Hawaii even a bar needs to have a certain % of food sales to get a liquor license. That's about food tempering the effects of alcohol.
Not trying the create a divide, just sharing what I've seen from the inside.
Have a great weekend, and go out and eat if you can.
@hawaiiboy That provides a lot of great insider context, thanks. No divide created at all!
I think you’re spot on in raising the big question of how viable most restaurants are, not as individual businesses, but as an entire concept that can exist where we’re headed. Thanks for the thoughts!
@joshbrez It was a pleasure writing it. I've tried to get out of the business a few times, but I keep getting pulled back. It seems to be one industry where wisdom and experience has value, especially with the current challenges.
My current challenge is my Wife discovered the bottle of Patron Silver that was in the back of he liquor cabinet.