BLS: hospital workers quit rate more than double national average


Dive brief:

  • While many restaurants have reduced their hours or adopted efficient technology to survive the labor shortage, a new Moody’s report suggests that such solutions are not enough. Restaurants will “be forced to raise salaries to attract the staff they need,” William Fahy, vice president and chief credit officer at Moody’s Investors Services, said in an emailed statement.
  • Hospitality workers also quit their jobs in August at the rate of 6.8%, more than double the national record 2.9% average dropout rate, according to the Bureau of Labor Statistics. More than 890,000 hotel workers resign in August.
  • The job crisis has been particularly hard on full-service restaurants. According to BLS data cited by Moody’s, this segment employs nearly 500,000 fewer workers than in February 2020. According to Black Box Intelligence, full service concepts work with 6.2 fewer employees in the kitchen than in 2019 and 2.8 fewer front desk employees.

Dive overview:

Despite this historic labor crisis, sales growth for many restaurant chains remains high, with some companies matching or matching exceed 2019 levels. But those sales figures may come from a price hike to offset wages and inflation – a solution that Moody’s says may soon irritate customers.

“Once consumers start to balk at higher prices, lose patience with longer waits, or not have their favorite menu item, inflation will put pressure on restaurant margins,” Moody’s says in his report.

Many restaurant chains that are seeing increased sales are also in the quick service segment. The employment gap in this category is smaller than the gap in the full-service segment, putting less pressure on fast food restaurants. But QSRs are far from being spared from labor issues, with many limit opening hours or close dining rooms because they don’t have enough employees to cover the shifts.

Restaurant suppliers are also facing labor issues, which has triggered a domino effect in the industry, causing product shortages and rising food prices. This puts more pressure on restaurant results, and forecasts of a continued exodus of hospitality workers could put more pressure on restaurants. A new survey by Job list and reported by Catering company, for example, finds that 58% of hospitality workers plan to quit their jobs by the end of the year.

Several restaurant chains have responded to the shrinking labor pool by increasing employee salaries and offering hiring incentives such as free iPhones and hiring bonuses. This summer marked one of the fastest growing wages in the segment since the early 1980s, and average wages surpassed $ 15 an hour for the first time in May.

Although the the restaurant industry has historically had high turnover rates, many employees are now leaving due to harassment from diners for enforcing COVID-19 mandates, as well as fear of contracting the virus at work. Fifty-nine percent of restaurateurs also fear that employees will quit if they are forced to receive the vaccine, according to data from Black Box Intelligence.

While Moody’s still expects industry conditions to improve over the next 12 months as consumers continue to dine out and government restrictions are lifted, health and safety increases again as the delta variant of the coronavirus spreads. This, added to the current labor shortage, supply chain issues and inflationary pressures, adds an additional level of risk to Moody’s earnings forecast for the restaurant industry, ”Moody’s said in his report.

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