The moves will affect nearly 2 million people.
More than a dozen states are planning to end enhanced weekly unemployment benefits in the next couple of months.
The $1.9 trillion American Rescue Plan extended the $300 weekly federal boost through September 6, but at least 16 governors are planning to cut it off as early as June 12 and as late as July 10. According to CNBC, the move will affect nearly 2 million people across Alabama, Arkansas, Arizona, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah, and Wyoming.
Several operators within the restaurant industry have blamed the current labor shortage on enhanced unemployment benefits. A recent Black Box Intelligence survey of more than 360 operators revealed that 57 percent believe the main driver of the labor crisis is elevated unemployment insurance. Wingstop CEO Charlie Morrison said in late April that the bigger payments have affected labor in the supply chain.
“[The labor shortage] has as much to do with the impact of government stimulus and creating an artificially high wage rate that is competitive to the people that are necessary to actually process chicken,” Morrison said. “And so the absolute number of chickens that are being processed is down. That’s why you see pressure even in the sandwich business and everywhere on chicken right now. Labor shortages are the real challenge we’re dealing with.”
Montana Gov. Greg Gianforte, who was the first governor to announce the end of federal unemployment enhancements, tied the labor shortage to the $300 weekly benefits.
“Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers. Nearly every sector in our economy faces a labor shortage,” Gov. Gianforte said in a statement. “Incentives matter, and the vast expansion of federal unemployment benefits is now doing more harm than good. We need to incentivize Montanans to reenter the workforce. Our return-to-work bonus and the return to pre-pandemic unemployment programs will help get more Montanans back to work.”
U.S. job openings increased by 597,000, or 8 percent, to 8.12 million in March, according to the Department of Labor. The Job Openings and Labor Turnover Survey hasn’t seen a total that high since it started collecting data in December 2000.
Food and drink places added 187,000 jobs in April, according to the U.S. Bureau of Labor Statistics. Roughly 10.64 million were on payroll, which is still down 1.65 million from February 2020.
In response to the labor shortage, President Joe Biden said Monday that workers will have to accept a suitable job offer or lose their unemployment benefits. The White House is directing the Department of Labor to reaffirm unemployment standards and to help states reinstate “work search” requirements for those utilizing unemployment insurance.
“There are a few COVID-19-related exceptions so that people aren’t forced to choose between their basic safety and a paycheck, but, otherwise, that’s the law,” Biden said during a press conference.
Major brands like BJ’s Restaurants, Applebee’s, IHOP, Chipotle, McDonald’s, and KFC have publicly announced intentions to hire thousands of employees in anticipation of busy summer months. To gain a competitive edge, some have increased their wages and benefits. Chipotle is raising the average wage of its workers to $15 per hour and giving employees an opportunity to make six figures in as little as three and a half years. McDonald’s is lifting its average wage to $13 per hour at its 660 company-owned stores, or 5 percent of the domestic footprint.
Gene Lee, CEO of Olive Garden parent Darden Restaurants, revealed in late March that tipped and non-tipped employees will earn at least $10 per hour, including tipped income. The wage will rise to $11 per hour in January 2022 and $12 per hour in January 2023. At the time, Lee described staffing as the company’s “greatest challenge.”
“It’s staffing, trying to attract people to come to work, that’s why we’re strengthening our employment proposition, which is already strong,” Lee said in March. “We’ve got to staff it, we’ve got to train people. We train people now in a very high-volume environment. As I think about what we’re focused on, it’s really back-to-basics restaurant operations. And one of those things that we focus on is hiring great people and having great certified trainers that are able to train those people to bring our brands to life.”