The Strain of Success: How the Labor Shortage Is Affecting America’s Restaurants

According to the most recent Department of Labor report, there are more than 8.2 million job openings in the United States, yet only about 7.2 million unemployed workers are seeking to fill these roles. That means if every job seeker were hired, a million positions would remain unfilled. Many of these vacant jobs fall in the service sector, with a high concentration in the restaurant and hospitality industry. 

While the rate of job openings for hotels and restaurants has fallen recently, the restaurant sector is struggling to fill positions, reflecting a deeper issue within the labor market. Many restaurants are operating at reduced capacity or with limited hours because they cannot find enough staff. This is not merely an inconvenience—it’s a significant barrier to a business’ economic success and customer satisfaction.

Multiple factors contributing to this shortage including early retirements, increased childcare costs, and restrictive immigration policies .Further compounding the issue, the Great Resignation 2.0 could be on the horizon, with nearly three in ten workers expected to quit their jobs by the end of 2024.  Survey findings released by Resume Builder indicate that 28 percent of 1,000 full-time workers plan to quit, with the highest percentage coming from the service industry and workers ages 18-34.

The labor shortage in the restaurant industry is not only a persistent issue but one that is expected to worsen. According to a recent survey highlighted in Tech.co, 62 percent of restaurant owners anticipate the labor shortage will continue or get worse over the next year. This aligns with the findings from Resume Builder, which indicate that nearly 30% of full-time workers, particularly in the service industry, plan to quit their jobs by the end of 2024. As restaurant owners grapple with the current staffing challenges, these projections underscore the urgency for effective solutions to attract and retain workers in the industry. 

The impact on restaurants is evident: longer wait times, inconsistent service, and increased use of technology like self-service kiosks and automated ordering systems are on the rise. While technology can improve efficiency, it cannot replace the personal service that defines great dining experiences. Restaurant owners have attempted to mitigate the shortage by raising wages and enhancing benefits, but these measures have not been enough to bridge the gap. 

While there is no silver bullet to solve this problem, Congress can help struggling restaurateurs by incentivizing a return to the workplace.  Through expanded workforce growth and tax policies, our legislators can grow the available talent pool of available workers. 

One such avenue is through expanding eligibility for the Work Opportunity Tax Credit (WOTC). WOTC is a federal tax credit established in 1997 to incentivize employers to hire individuals from specific groups facing significant barriers to employment, such as SNAP recipients, long-term unemployed individuals, disabled veterans, and TANF beneficiaries. WOTC has not been updated in 27 years, diminishing its effectiveness due to wage inflation and rising employment costs. To enhance its impact, Rep. Lloyd Smucker has introduced the Improve and Enhance the Work Opportunity Tax Credit Act, which proposes increasing the credit to 50 percent of qualifying wages up to $6,000 for employees working up to 400 hours and adding an extra credit for those working beyond 400 hours, encouraging longer employment retention.

Another avenue is to increase the number of available workers by streamlining the work authorization process for asylum seekers. The “Asylum Seeker Work Authorization Act” (S. 255, H.R. 1325) reduces the wait time for work authorization for asylum seekers from 180 to 30 days, streamlining the asylum process, and providing necessary labor to businesses. Passage of this bill would offer much-needed relief to struggling restaurant owners while providing income opportunities for individuals in need. 

The restaurant industry's ongoing labor challenges highlight a significant disconnect between those touting a robust economy and the on-the-ground reality for many businesses. As we celebrate the gains in job creation, we must also address the specific hurdles faced by industries that rely heavily on in-person labor. By focusing on workplace growth and tax incentives, we can help ensure that the economic recovery benefits all sectors and fosters a robust and dynamic workforce.