WASHINGTON (AP) – U.S. restaurants and shops are rapidly raising wages to attract more applicants and keep pace with a flood of customers as the pandemic subsides.
McDonald’s, Sheetz, and Chipotle are just a few of the newest companies to follow Amazon, Walmart, and Costco in raising wages, in some cases to $ 15 an hour or more.
The wage increases are of course a blessing for these employees. Restaurants, bars, hotels and shops remain the worst-paying industries, and many of their employees have been at risk of contracting COVID-19 at work while employees have been able to work from home over the past year.
Still, the wage increases could contribute to higher inflation if companies raise prices to cover the additional labor costs. However, some companies could take the cost or invest in automation over time to offset higher wages.
According to OpenTable, an industry software provider, states and cities are easing business restrictions as COVID-19 deaths and cases decline. In countries like Florida, Nevada, and Texas, restaurant traffic is above or near pre-pandemic levels.
Many companies say they have difficulties finding workers.
“Customers come back faster than restaurants can hire,” said Josh Bivens, director of research at the leftist economic policy institute. “By increasing wages, they can get more workers in the door.”
In April, although hiring slowed overall, a category that includes restaurants, hotels and entertainment venues hired more new employees than the previous month, a sign that the extra pay is working.
McDonald’s announced Thursday that it would raise salaries for workers in its 650 company-owned stores to an average of $ 15 an hour through 2024. Beginners will make $ 11 an hour. The company is asking its 14,000 franchise restaurants to make the same changes.
Also on Thursday, Amazon announced it would pay new hires $ 17 an hour to hire 75,000 new employees. The online giant said it was offering a $ 100 bonus on new hires who were vaccinated.
And Sheetz, a mid-Atlantic convenience store chain, said Monday it was giving its 18,000 employees a $ 2 an hour increase plus an additional $ 1 an hour for the summer.
Across the restaurant industry, wage increases have largely traced total wages back to the same growth trend they had before the pandemic, Bivens said. He assumes that the increases will exceed this trend in the coming months.
Consumer prices in restaurants rose 0.3% in April, well below their labor costs for the month. This suggests that many restaurants are accepting lower profits rather than passing the cost on to customers, Bivens said. Restaurant prices rose 3.8% in the past year, which is above pre-pandemic levels.
Concerns about higher inflation have dominated financial markets after consumer prices rose 4.2% in April, compared to a year earlier, their biggest gain in 13 years. However, the increase was mainly due to rising used car prices and more expensive airline tickets, not higher labor costs.
In a sign that businesses in general are struggling to hire workers, the number of available jobs in the US rose to 8.2 million by the end of March. Yet employers only created 266,000 jobs in April, far fewer than in the previous month.
Some of the unemployed are reluctant to return to work for fear of contracting COVID-19, while many women have left the workforce to look after children who are still in online school. Because of the additional $ 300 unemployment benefit, some unemployed people receive more benefits than they earned in their old jobs.
Gad Levanon, a labor economist on the Conference Board, a corporate research group, said the labor shortage is likely to be temporary, suggesting wages may not continue to rise at the same pace.
“Fear of COVID is likely to decrease, schools are likely to open in September, extra unemployment benefits will end in September,” he said. “So we’re going to see some easing of labor shortages.”
Despite recent wage increases, the average weekly salary in April was just $ 477.40 in a category that includes restaurants, bars, hotels, amusement parks, and other entertainment venues.
This partly reflects the large number of part-time workers in the industry, some of whom prefer shorter hours. But others would probably work harder if they could.
Fight for $ 15 and Union, a working group trying to unite fast food workers, said the increases will not be enough and will continue to demand a starting wage of $ 15 an hour for all McDonald’s workers.
“McDonald’s clearly understands that something has to change in order to hire and retain talented employees,” said McDonald’s employee and union organizer Doneshia Babbitt in a statement. “Now they are increasing the pay for some of us and using fancy math tricks to gloss over the fact that they are selling short most of us.”
The $ 15 battle is planning strikes in 15 cities next Wednesday ahead of the fast food giant’s annual general meeting.
AP Business writer Dee-Ann Durbin contributed to this story from Detroit.
PICTURED: FILE – This file photo dated April 30, 2019 shows a McDonald’s restaurant on the north side of Pittsburgh. U.S. restaurants and stores are rapidly raising wages to attract more applicants and keep pace with a flurry of customers as the pandemic subsides. McDonald’s, Sheetz, and Chipotle are just a few of the newest companies to follow Amazon, Walmart, and Costco in raising wages, in some cases to $ 15 an hour or more. (AP Photo / Gene J. Puskar, File)