With the summer season just days away, Island Grill at the Frisco Bay Marina is short 70% of its usual seven-person kitchen crew.
Owner Bob Kato, who also operates the Tavern West restaurant on West Main Street, says the labor crunch is especially hard this year. Both restaurants are hiring just as other businesses in town are also ramping up for the season or fully reopening for the first time since the pandemic struck. There are also ongoing issues that a resort community like Frisco faces, such as the scarcity of housing for workers. But his immediate shortage is in certain positions.
“You can get plenty of waitstaff and bartenders. It’s the kitchen,” Kato said. “We have not had any luck hiring kitchen staff at either restaurant. We are still planning to open both this weekend, but if we can’t hire more help soon, we will be forced to close both restaurants a couple of days a week.”
As restaurants, hotels and other businesses reopen in Colorado, the reality is settling in that pre-existing economic issues are back and being aggravated by pandemic ones.
The state’s low unemployment rate before COVID-19 struck — 2.8% in February 2020 — meant some industries already faced hiring challenges. As the state’s labor force and jobs are now returning — or not, as unemployment remains high — there is debate over what’s causing the labor shortage or whether there actually is one.
Craig Hanzelka, a chef who lost his job during the pandemic last year, sees both sides. After struggling to find a job that fits his decades of experience, he started work last week as a server at a wood-fired Italian restaurant in Denver. They desperately needed staff, he said.
“Any human body that can get into a restaurant and work is what they’re looking for,” Hanzelka said. “It doesn’t matter what your age is, it doesn’t matter what your experience is, they’re accepting anyone, and taking everyone, and they’re desperate.”
But it’s not his ideal job. He’s a trained chef. But back-of-the-house kitchen jobs don’t pay enough to pay his bills in Denver. Higher rents and housing costs statewide are pushing lower-wage earners to consider alternate careers with higher wages.
“There’s not enough money to get you in the door when people in the front of the house are making three to five times more than you’re going to make,” Hanzelka said. “And you don’t have to be there for 11 hours a day.
“If someone offered me a (chef) job and said, ‘OK, we’ll pay you $35 an hour and we’ll even include you in the tips share,’ that would be something,” he said. “But how many restaurants can really afford to pay that much?”
Economists: Not quite a labor shortage
The extra money from federal unemployment helps supplement weekly state benefits and gets job seeker Alex Wilson closer to his prior pay as an experienced welder at $25 an hour. He’s had no luck finding a job at a comparable wage. The help-wanted ads for his field are for entry level workers and pay $16 to $18 an hour.
“I’m on unemployment right now and I’m spending all my money remodeling my house just so I can stay busy while I’m waiting for good work to come around,” said the Longmont resident. “Luckily I’m making over $700 a week right now (on unemployment) so I can keep these projects going while I’ve got time. But even if that company called me back and said, ‘Hey, we’re sorry. Do you want to come back at your normal pay rate?’ I’d be like, ‘Sure, I’ll be there tomorrow.’”
Economists like Heidi Shierholz said a big sign of a labor shortage is when wages start increasing rapidly everywhere. Employers cannot hire workers fast enough so they must raise pay. But Shierholz, a senior economist and director of policy at the Economic Policy Institute in Washington, D.C., said rising wages are not a widespread trend in every industry.
While hourly wages for the leisure and hospitality industries have shot up in recent months, the increase puts pay “roughly where they’d be if COVID had never happened,” she said on a Twitter thread about why this isn’t a labor shortage. The number of lower-paid leisure and hospitality workers still grew, she said, making April “by far the strongest of any sector, even accounting for the fact that it has more ground to make up.”
The data, from the U.S. Bureau of Labor Statistics, shows that average weekly pay for nonmanagement jobs in leisure and hospitality took a year to recover and get back to pre-pandemic levels, reaching $15.05 an hour in February. By April, it rose to $15.68.
Similar trends played out in Colorado. The restaurant industry continues to struggle finding enough help, said Ryan Gedney, senior economist with the Colorado Department of Labor and Employment. But he said there is no widespread shortage of workers here.
“I think there are some individual restaurant employers that are certainly having difficulty filling positions quickly enough to meet demand,” he said. “However, a gain of 7,200 accommodation and food service (jobs) in April is a huge number of jobs added in that industry in a single month.”
It’s also difficult to gauge a labor shortage in real time because supporting data comes out months later. Fourth quarter 2020 wage data was just released by the U.S. Bureau of Labor Statistics last week. In Colorado, overall wages declined 0.6% from fourth-quarter 2019. However, in the state’s largest counties, fourth quarter wages rose between 0.8% in Douglas County to 17.5% in Boulder County.
In a news conference last week, CDLE Executive Director Joe Barela said Colorado had a tight labor supply before the pandemic. Colorado’s unemployment rate was below 3%. It’s now at 6.4% and the number of people working or looking for work — an economic statistic known as the labor force participation rate — is now higher than it was before the pandemic. In other words, there are more people in the job market in Colorado than before the pandemic.
“I want to remind you all if you can go back to February 2020, Colorado (was) in a skilled worker shortage and all businesses were having trouble finding workers,” Barela said. “Worker shortages … aren’t going to magically go away when we start coming out of the pandemic. We’re still in an oversupply of jobs and an undersupply of workers.”
Restaurants struggle to hire; some increase pay
Finding qualified applicants to fill open roles at the Big City Burrito in Fort Collins seemed to ebb and flow with federal unemployment benefits, said owner Laurie Cadwell.
When the $600 weekly bonus ended in late July, “I started getting some good applicants — people with some restaurant experience, some basic food safety and customer service experience,” Cadwell said.
But when a new $300 bonus began this year, applicants for jobs that start about $1.70 above Colorado’s minimum wage nearly vanished.
“I put a ton of ads on Indeed and I got almost no replies. I mean, it was like day and night,” she said. “People were applying and said they had experience. Half the time, they didn’t show up for the interview. … That’s been really difficult, so lately we’ve had to close half days and all day Mondays. That’s really hurting our business.”
Nine out of 10 restaurants in Colorado are having trouble hiring enough workers, according to a new report from the Colorado Restaurant Association.
“Some operators have told us that they’ve never seen a hiring crisis like the one unfolding right now, not in their decades-long careers,” said Sonia Riggs, CRA’s president and CEO. “When restaurants can’t add more seating capacity because they don’t have the staff to service those tables or cook the food, we believe that points to an ongoing labor shortage.”
Riggs said there are several factors complicating hiring. There’s competition from one another as restaurants reopen. And 15% of restaurant workers left the industry in the past year, according to CRA. An unknown number remain on unemployment benefits — but 65% of restaurant operators surveyed suspect workers haven’t returned for that reason.
Complaints that applicants weren’t showing up for job interviews or responding to job offers led the state labor department to pass an emergency rule in early May that unemployed workers can lose benefits if they refuse a job. CDLE also created a form for employers to report applicants who refused suitable work.
But Riggs says it’s not just just kitchen staff. About 65% of respondents say they’re struggling to hire servers who make tips. To compete, 95% of restaurants have increased their wages and 21% now offer benefits and are being creative for an industry known for very thin margins.
“Some operators are moving to a tip-pooling model to diminish the disparities between wages for front-of-house tipped workers and back-of-house untipped workers, while others are utilizing service charges to equalize pay,” Riggs said. “We’re also hearing of restaurants offering signing bonuses and bonuses for time-related milestones at work.”
There’s limited data on whether wages are rising. A search on “line cook” in the state’s job board ConnectingColorado.com had 300 listings on Thursday. Some jobs start at the state’s minimum wage of $12.32 an hour, including a part-time dishwasher job at the Golden Corral in Grand Junction. The Colorado Mental Health Institute at Pueblo needs a part-time cook that pays $12.87 to $13.50 an hour. Red Robin in Castle Rock offers health insurance, food discounts and a $400 incentive to new hires, with wages starting between $15 and $16 an hour.
Kato, with Tavern West in Frisco, said he normally starts kitchen crew at $15 to $16 an hour. But this summer, he said, “I’m going to be probably starting them at about $20, $21. And my guys that are returning, I’m probably going to have to give them a couple dollars an hour raise.”
Weighing the benefits of returning to work at a livable wage
Since Dec. 27, Americans eligible for at least $1 of weekly unemployment benefits have received an additional $300 as part of the federal relief plans. Typical benefits are 55% of one’s average weekly wage on the job with a maximum of $649 per week.
More than $9.4 billion in state and federal unemployment benefits have been paid to unemployed workers in Colorado.
Such benefits gave Boulder resident Nathan Nelson time to strategize about his next steps. He lost his part-time jobs as a waiter when restaurants closed to in-person dining last year. He hasn’t returned yet because the restaurants have not fully reopened to give him the hours he needs. He’s worried that it’ll be more difficult now to juggle two jobs — one with busy weekday lunches, the other with packed weekend nights — to get to what he considers a livable wage.
“I have to play them to maximize each one. (It’s) really logistical when you’re trying to make the best financial decision for yourself,” he said. “The place in Boulder actually does decent lunches and I can give away the Friday and Saturday shifts, which are heavily coveted because people will make more money. … That opens me to the weekend at the other place. If I wanted to make $50,000 a year, I would really need both.”
Last week, Gov. Jared Polis announced that the state would use federal funds to pay a $1,600 incentive to get unemployed Coloradans back to a regular job. The Colorado Jumpstart program will pay eligible workers the full amount after they work eight weeks. The incentive drops to $1,200 on Sunday, but is still offered to those who return to work through June 26.
As of May 26, 1,567 Coloradans on unemployment have opted into the Jumpstart program, according to the state Department of Labor and Employment.
Cadwell, owner of the Big City Burrito, doesn’t know if the Jumpstart program is working but she said she received more applications last week than in prior weeks.
“Probably doesn’t hurt,” she said.
Meanwhile, Wilson, the job-hunting welder, said he’s looking at other careers and possibly investing in more training for a higher paying welding gig. He hopes to stay in welding, but knows he must figure out something before federal benefits end in September.
“Honestly, I have to return,” he said. “(Unemployment) doesn’t last forever. If a job came up tomorrow, I would rather work than sit around. I’ve still got a 401(k) that I want to pay into and I have big plans for the future that were halted by the loss of my job. … For the majority of us trades people and construction workers even coming down to the sign holders, if you give us a job, we’re ready to work.”