Why more than half of the restaurant workforce is rightfully leaving the industry

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So much in the world is changing, but one thing remains painfully consistent: corporations care infinitely more about their profits than the workers who create those profits, especially in the restaurant industry.

What changes are American workers who no longer want to put up with exploitation. For example, more than a million workers left the lowest paid workforce – the restaurant industry. And because black workers suffered lower tips and higher rates of harassment and hostility during the pandemic, they left the restaurant industry at three times the rate of white workers. Some restaurants are responding by increasing wages and mobility; others, like Applebee, resist change in every way possible – and will eventually fail.

Workers leave partly because it costs more to get to work than what they earn when they get to work. Rising gas prices and inflation in general are impacting all Americans, but they have been particularly painful for low-income Americans. It is estimated that many low-income households were already spending up to a fifth of their income on gasoline a year ago. So when prices go up, they squeeze low-income families disproportionately more than everyone else.

Gasoline price impacts are also racialized. For example, black households spend a higher share of their money on gas than their white counterparts. Our country could respond to this crisis with subsidies to low-income workers to cover transportation costs, or higher wages, to compensate for the continuing injustice of this inequality. But the companies that dominate the low-wage service industry have a different plan: Use it as a mechanism to coerce low-wage workers into accepting poverty wages.

Recently, a leaked memo circulated written by Wayne Pankratz, an executive at the Applebee franchise conglomerate that owns and operates dozens of the chain’s restaurants across the Midwest. Pankratz apparently saw rising gasoline prices as a way to force workers to take jobs at lower wages, writing:

“Most of our employees and potential employees live paycheck to paycheque. Any increase in gasoline prices reduces their disposable income. As inflation continues to climb and gas prices continue to rise, this means employees will need to work longer hours to maintain their current standard of living.

According to the memo, this was an opportunity not only to address the historical workforce crisis in the restaurant industry – which, with 10% of vacancies, is above the national average – but to do so in cutting wages because impoverished workers be even more desperate.

The leaked email was very revealing. First, it showed that Applebee’s is as desperate to find staff as any other restaurant business, but is looking for a way to avoid raising wages like many other restaurants are doing right now. Second, the memo demonstrated how completely out of touch these chain restaurant executives are with the realities of their employees – the vast majority of workers say they leave the restaurant industry because wages are too low to cover costs such as transportation to work; rising gas prices will be more likely to keep these workers at home, not encourage them to earn an hourly wage below the cost of a gallon of gas.

The franchise company fired Pankratz and Applebee disavowed his memo. Problem solved, right? Not exactly. Going against the national trend of responsible small business owners raising wages to attract workers and beginning to address the historically monumental wage inequality in our country, companies like Applebee’s and other member companies of the National Restaurant Association have continued to resist wage increases despite their own massive staffing crisis. They continued to pressure Congress to stagnate wages. Because of their influence, our country still has a sub-minimum wage for restaurant workers, which is $2.13 an hour federally, and that hasn’t gone up a penny more than 30 years. Underpayment forces customers to pay the majority of restaurant workers’ wages through tips.

This policy has led to rampant sexual harassment and racial discrimination in the industry because when the customer pays your salary, the customer is always right. Black restaurant workers, in particular, have even lower take-home pay than white workers due to sub-minimum pay and tipping discrimination. And these dynamics have only worsened during the COVID-19 pandemic; 75% of tipped restaurant workers report that their tips have decreased during the pandemic and 54% report that workplace harassment has increased.

That’s why more than half of restaurant workers say they’re leaving the industry and will only return if they’re paid a fair wage – a full, living wage plus tips. Restaurant workers overwhelmingly support One Fair Wage and the seven states that have adopted One Fair Wage – as diverse as California, Montana and Minnesota – have seen higher industry sales growth and tipping rates even higher. Last year, a Denny’s executive even admitted to shareholders that fair pay is good for business.

But Applebee’s and other members of the National Restaurant Association continue to resist wage increases and push to keep wages below the minimum. And last year, when Applebee held a nationwide hiring day, they didn’t address the pitiful wages they were offering to people who were asked to put their lives on the line as workers. essential during a deadly pandemic. Instead, Applebee offered coupons for a free appetizer.

Americans are leaving the service sector in record numbers due to systemically low wages. The responsible, just and very belated answer is to raise wages so that in the richest country in the world there will never again be a category of people who are the “working poor”. Applebee’s, among many restaurant companies that received government bailouts during the pandemic, reported that the financial aid boosted its profits last year. But these companies remain stubbornly and repugnantly determined to keep workers’ wages as low as possible, or even cut them further. It’s a systemic injustice in our country that firing an executive or handing out mozzarella stick coupons doesn’t begin to remotely change.

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Saru Jayaraman is co-founder and president of One Fair Wage, director of Food Labor Research Director at UC Berkeley, and author of One Fair Wage: Ending Subminimum Pay in America (New Press, 2022).

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