"The Staffing Shortage Is Real" - Manhattan Restaurants Struggle To Hire As Millions Paid Not To Work

Tyler Durden's Photo
by Tyler Durden
Saturday, May 01, 2021 - 10:55 AM

Long-suffer NYC restauranteurs may have been tempted to celebrate when Mayor Bill de Blasio announced yesterday that the Big Apple would "fully reopen" on July 1. But just as the problem of COVID-19 restrictions fades away, restaurant owners are facing the same problem that has prompted Royal Farms to offer $500 signing bonuses while some McDonald's franchisees offer prospective workers $50 just to come to an interview: that is, President Biden's massive $1.9 trillion stimulus is paying too many American workers to stay home.

Because of this, small businesses are reporting record levels of unfilled positions.

Job openings soared to a 2-year high last month, typically a sign that the labor market is "overheating". However, the latest jobs data for March showed the unemployment rate in the US remains at 6%. Even though the restaurant industry showed some of the biggest employment gains of any industry last month, too many servers are apparently still being paid to stay home.

The situation is particularly dire for Manhattan restauranteurs, who watched their employees flee the city in droves last year as their livelihoods disappeared. However, many of these people have since returned to the city, but thanks to generous unemployment benefits and, of course, the stimulus checks, many haven't felt the pressure to go back out and work. After all, many are making more money just staying home.

The dearth of potential servers and bartenders is putting restaurateurs like Mark Fox in a bind. The president and founder of Fox Lifestyle Hospitality Group owns four restaurants in Manhattan, but he’s worried that two new restaurants he's planning to open in Q3 might see their openings pushed back because of the lack of workers.

"The staffing shortage is real," said Fox, who already postponed the reopening of his White Oak Tavern in Greenwich Village, to May from March. "I don’t want to lose revenue, but I will not lose reputation of the restaurant by trying to open it with undertrained or underpowered staff levels."

The paucity of potential workers is especially dire in a city where an estimated 5K restaurants have closed since last March. Many hospitality workers who moved out during the pandemic aren’t planning to return, according to Bloomberg. Some switched their focus to other industries where the hours aren't as erratic or demanding. Others are simply going elsewhere, like the Hamptons, where they believe they can make more money.

In the short-term, many restaurants have been forced to cut hours and share staff with other establishments. Some are pushing off their reopenings until the labor situation improves, customers return, or both.

Joseph Smith, owner of the Bobby Van’s Steakhouse chain, said he’s short about 50 employees, which has forced him to delay the reopening of two restaurants in midtown. Both are in heavily tourist-populated areas, which have seen the slowest recovery so far, as most gains have been seen in restaurants that cater to locals.

"Wall Street is not back in full swing and the bosses that do the entertaining aren’t in town -- they’re either in Florida or the Hamptons," Smith said. "Some of the businesses are coming back, but it’s a slow process. Even if I get 40 people in for lunch instead of 140, I still have to staff it up like it was 100 people."

Until tourists and office workers return, why would a server want to risk guaranteed checks from the government when the tips upon which they depend simply aren't guaranteed?

Investors and business owners will receive their next update on how Biden's stimulus is wrecking the labor pool next week, when employment data for April will be released.