The restaurant industry was hit hard by the government’s COVID restrictions. According to the National Restaurant Association, their 2020 sales were down $240 billion. In most states, they were completely shut down for months due to local lockdown orders. Eventually, some states allowed restaurants to reopen but had to operate at a minimal capacity and ensure tables and guests were socially distanced. Now, as many local and state governments are allowing businesses to operate at full capacity once again, the restaurant industry has a new battle on its hands. Thanks to overreach and increased unemployment benefits, restaurant owners can’t find and keep employees.
After being out of work for the last year, many employees opt to stay home and collect their unemployment benefits instead of returning to the workplace. Before the pandemic, the national average weekly unemployment benefit was $370. An additional $600 weekly payment was added to that amount as part of the first stimulus bill and has been extended through July 31. While well-intended, that extra money is causing some negative repercussions to the restaurant industry. Former restaurant employees have found that their unemployment benefits bring in more money than they would be making at their low-wage restaurant job. The average nationwide weekly average pay for a full-time worker is about $500.
The increased unemployment benefits make it a challenge for restaurant owners to find and retain employees. They have to turn business away or risk long wait times due to the employee shortage, which leads to unhappy customers. Former employees have different reasons for not coming back to work. Some employees are deciding not to come back to work due to fear of exposure to the virus. Others are unsure what business will be like if they were to return. Between local restrictions on how many people are allowed to dine in and consumers being unsure that they feel safe dining in a crowded capacity, an eight-hour shift at a restaurant may not bring in enough money to pay their bills. Most restaurant employees rely on tips. With no customers coming in, they would be going home empty-handed while they could have been receiving unemployment benefits.
The increased unemployment benefits are another example of wasteful spending by the government. The stimulus bills have been full of well-intended but poorly executed payments. People who were not impacted by COVID shutdowns were given thousands of dollars with the hopes of that money being put back into the economy. Surveys have shown that most people used that money to either pay down debt or hold it in their savings accounts in case of more shutdowns. The paycheck protection loans included in the CARES Act did not help the restaurant industry either, with only 9% of the funds going to restaurant owners. Millions of dollars are currently being red-flagged as possibly being taken out for fraudulent activities.
Now, restaurants that survived the last year of lockdowns, restrictions, and uncertainty are at risk of shutting down due to not having enough employees to run their operations. This will cause more restaurant closures and a ripple effect on other industries such as food and beverage distributors and even the agriculture industry. All of these people without jobs relying on unemployment benefits will have devastating consequences for our economy. The best solution would be for the COVID stimulus benefits to be done with and for restaurant owners to open up and run their businesses themselves.