Skip to main content

The unemployment rate is going down and the minimum wage is on the rise --- A blessing or a curse?

Impeccable service can only be delivered by a well-trained, friendly staffAccordingly, the service industry is labor-intensive and employs a large number of skilled and unskilled workers.
The recent employment report released by the U.S. Bureau of Labor Statistics also suggests that food services and drinking places (or restaurants), professional and business services, and healthcare are the three key sectors that contribute to the employment growth in July.
Yet, what may seem to be an exciting update for the labor market turns out to be concerning.Some critics pointed out that the job market was unhealthy because "too many" people were working in restaurants (the number increased by 53,000 in July 2017). The leisure and hospitality industry, which includes restaurants, added 62,000 jobs in July and a total of 313,000 over the year.

What are the concerns?

  • Restaurant jobs are growing at a faster pace than healthcare, manufacturing or construction jobs.
  • For decades, restaurants have remained labor-intensive, with few improvements over time.
  • Most restaurant workers are earning low incomes, usually at the minimum wage or about 50 percent of the national average.
  • Both ends of the restaurant industry, meaning either the quick-service or high-end restaurants, are still growing and performing well, but casual-dining family restaurants are facing challenges.

Is raising the minimum wage a remedy?

One may argue that these concerns are the result of the wages of restaurant or hotel workers being too low. Once the minimum wage increases, there would be no more concerns.
In fact, raising the minimum wage may also result in another outcome — it can possibly have a ripple effect in which everyone, including those who are making above the minimum wage, will get a raise. The gap between minimum wage and the national average would probably remain unchanged (if not become bigger).
However, prices are going to increase as employers pass the higher labor costs to consumers. In some rare and extreme cases, restaurants have explicitly added a "minimum wage" fee to the bills.
In the end, the increase of minimum wage is unlikely to help those living on a minimum wage to save more or improve their quality of life. What we discussed here can explain why places like BirminghamClevelandSt. Louis and Illinois freeze or even lower the minimum wage.

Then, is increasing the minimum wage still a good thing?

Yes, it could be. Increasing the minimum wage can push businesses to find ways to lower the operation costs through innovations. We have recently observed many innovative changes in the hospitality industry. To name a few examples:
  • A restaurant with no hosts, no waiters, and no tables
  • Robots that can cook in a kitchen or make coffees
  • Servers being replaced by self-ordering kiosks
  • Robots that can deliver food inside a building or out on the street
  • Robots that can provide butler service in a hotel
  • Automatic drink dispensers
  • Personal assistants who are also robots
  • Cars that can drive themselves
  • Robots that can pick up and pack online orders

What does the future hold?

By 2025, the hospitality industry is expected to go through some transformational changes due to the advancement of new technologies. Moreover, as the cities we are living in are getting "smarter," businesses are getting up to speed, too.
Now, here leaves the question that we all need to think about: What can we do to avoid being replaced by machines at work?
Note: This article was also published at MultiBriefs.com - the leading source for targeted, industry-specific news briefs. The picture was downloaded from Florida Restaurant Law - A Blog

Comments

Popular posts from this blog

Want a job at McDonald’s? Now, it is as easy as talking to Alexa

McDonald’s Corporation introduced the world’s first voice-initiated job application process called McDonald’s Apply Thru. Now, job seekers can initiate the job application process through McDonald’s Apply Thru by taking to either Alexa or Google Assistant.

How McDonald’s Apply Thru works
The job application process begins with the applicants saying:
Alexa, help me get a job at McDonald’s.” 
or
“Google, help me get a job at McDonald’s.”
Then, the job applicants will need to answer a few basic questions, including their name, job of interest, and the location where they want to work.
Afterward, the job applicants will receive a text message with a hyperlink that will take the applicants to continue the rest of the application process.  
Where McDonald’s Apply Thru serve
McDonald’s Apply Thru is now available in nine countries, including the U.S., U.K., Canada, Australia, France, Germany, Ireland, Italy, and Spain. It will be made available to other countries in the coming months.
Why McDona…

Is today's market too tough for upscale restaurants?

Operating a restaurant is never easy, but is it particularly challenging for upscale restaurants?

Restaurants Unlimited Inc., for instance, which operates 35 fine-dining and “polished casual” eateries, filed for bankruptcy in Delaware last week. Earlier in June, the Four Seasons Restaurant, an iconic spot for power lunch in Manhattan also closed for business after its reopening within less a year.

Are these two examples an isolated case or the tip of the iceberg? Then, if upscale restaurants are struggling to survive in today’s market, what challenges are they facing?

The rising labor cost

According to the Bloomberg report, Restaurant Unlimited Inc. hires 50 salaried employees at the chain’s headquarter in Seattle, plus another 168 full-time and 1,885 part-time restaurant workers. The rising wages in Seattle, San Francisco, and Portland have resulted in a total of $10.6 million wage expenses in the fiscal year of 2019. Nevertheless, its revenue for the year ended in May dropped 1%, at $…

Suggestive Selling – All You Have to Do is Ask!! (By Nicole Lee)

A simple, relatively normal thing occurred while in the drive-through at Del Taco with my boyfriend the other day.After placing our semi-high maintenance food order, the person taking my order, in a forced monotone voice, unenthusiastically asks, “Would you like to add our new blah, blah, blah for dessert?”All my sweet-tooth-driven ears heard was “dessert” and I wanted something sugary to complete my four-course drive-through meal. My boyfriend asked if I wanted the donut thing they were trying to push, but I ended up going with a churro.As we received our food, my boyfriend told the server, “Good job on the upsell.”In which we received the same unenthusiastic “thank you” in reply. This all led to a discussion about suggestive selling, how easy it is, how to do it correctly, and how beneficial it is.Of course, this Del Taco drive-through upsell experience did not meet our standards of how to do it correctly, but it worked!

Easy-Peasy
Both my boyfriend and I have sales and hospitality ba…