A More Financially Stable Workforce Can Fuel Industry Recovery — Even in a Talent Crunch

There’s a surge in demand for hourly workers, and restaurants nationwide are grappling with unprecedented staffing shortages. It’s even led some restaurants to temporarily shutter their doors. Recent research found this shows no sign of slowing down, as more than a third of workers don’t intend to return to the industry.

Many restaurants are responding by offering higher (and higher) wages, signing bonuses, paid vacation and more. But, mounting research shows some workers are looking for more than just money.

In fact, Netspend surveyed more than 900 tipped workers across the restaurant, food delivery, hospitality, salon and spa industries to get a pulse on the financial impacts of COVID-19. The research showed that financial stress is at all-time highs among many segments of the workforce, and that it directly impacts retention.

As restaurants look to rebuild, they should prioritize empowering a financially stable, healthy workforce with digital, on-demand access to earned wages for the following reasons:

Financial stability is a win-win for the employer and worker

Recent restaurant closures, even temporary ones, help to underscore the importance of recruiting and retaining a staff. But, a financially unstable workforce only makes this more challenging. Consider that Netspend research showed: 

• Half of workers say their financial situation disrupts their work.
• There’s a direct link between this financial stress and workforce retention, as nearly half (48%) of workers have lost or quit a job due to a lack of financial wellness.
• The vast majority of financially stable employees (87 percent) are likely to remain with their current employer for the next year, compared to only 58 percent of those who are financially unstable.

As restaurants work to recruit new workers while retaining their current staffs, solutions that offer faster, digital access to earned wages could be key. Four in five workers (79 percent) would be willing to switch jobs for earned wage access, and it’s been shown to increase employee engagement as well as to positively impact employee productivity and health.

For many, it’s not just about how much they’re paid — but also how they’re paid

According to NPR, average hourly wages in the hospitality industry are nearly 10 percent higher than they were a year ago. Some have even started offering benefits not typically associated with the restaurant industry — from paid vacation to 401(k) matches and more. But it’s clearly not helping, as a recent National Restaurant Association survey found nearly three-fourths of operators (72 percent) name recruitment and retention as their top challenge, up from just eight percent in January 2021.

But for many workers, the COVID-19 pandemic simply changed what they want from their employer, bringing an increased emphasis on things like flexibility (over salary).

In addition to offering higher wages, restaurants should also consider the benefits and perks that could help them stand out and entice workers back. One option is to offer more flexibility around pay — among workers who have on-demand access to earned wages, recent research found 72 percent report a quality of life increase, 77 percent a decrease in stress and 72 percent feel more in control financially.

These solutions could help to address other pandemic-related challenges, like ongoing cash management hurdles

Based on insights from Visa, the COVID-19 pandemic also brought about a disconnect for many restaurants and their workers, as consumer payment preferences shifted toward digital, contactless options.

This shift led to cash shortages at many restaurants that, despite not having enough cash on hand, continued to pay their tipped workers by cash or check. For many workers, this added up to delays receiving tip or expense reimbursements at the end of each shift — a heavy burden for an already financially stressed segment of the workforce. 

At the same time, workers needed digital payments more than ever, to participate in the digital, contactless economy. So, they were left shouldering the burden of costly and time-consuming extra steps to digitize their cash or check payments.

Today, it’s critical restaurants address these challenges, as early evidence indicates the proliferation of digital, contactless payments is here to stay. As restaurants work to rebuild, more are embracing this shift by giving tipped workers access to on-demand, digital tip payments. This solution helps to close the digital access gap, and Netspend research showed it could help to address recruiting and retention challenges: 

• Nearly half (49 percent) of workers would be willing to stay at their current job longer if they received faster access to their tips.
• Forty-four percent said they’d be willing to stay longer if they received easier access to their tips.
• Sixty-five percent of workers agree they would rather work for an employer that gives them their tips digitally.

As restaurants nationwide focus on rebuilding, it’s imperative to enable financial health and participation in the digital economy to bolster business and deliver better outcomes for a recovering workforce. Closing the digital access gap through faster, digital earned wage access is one key step in achieving the stability the restaurant industry needs. 

To see more data on the impact of workforce financial health in the restaurant industry, download Netspend’s restaurant eBook.