Fast-food chains have a big problem: A shortage of teen workers

FAN Editor

A quarter-century ago, there were 56 teenagers in the labor force for every “limited service” restaurant — that is, the kind where you order at the counter.

Today, there are fewer than half as many, which is a reflection both of teenagers’ decreasing work force participation and of the explosive growth in restaurants.

But in an industry where cheap labor is an essential component in providing inexpensive food, a shortage of workers is changing the equation upon which fast-food places have long relied. This can be seen in rising wages, in a growth of incentives, and in the sometimes odd situations that business owners find themselves in.

More from the New York Times:
Push to settle McDonald’s case, a threat to franchise model
Up, up, up goes the economy. Here’s what could knock it down.
The economy is looking awfully strong

This is why Jeffrey Kaplow, for example, spends a lot of time working behind the counter in his Subway restaurant in Lower Manhattan. It’s not what he pictured himself doing, but he simply doesn’t have enough employees.

Mr. Kaplow has tried everything he can think of to find workers, placing Craigslist ads, asking other franchisees for referrals, seeking to hire people from Subways that have closed.

Yet there he was during a recent lunchtime rush, ringing up veggie footlongs and fountain drinks. He feared that if the line grew too long, people might get frustrated and not come back.

“Every time there’s a huge line, the next day the store is nowhere near as busy,” he explained later as he straightened tables and swept up crumbs.

Across the country, Keith Miller, another franchisee, is dealing with the same problem. “What employees? We don’t have them anymore,” joked Mr. Miller, who can’t find enough workers for the three Subways he owns in Northern California.

Since 2010, fast-food jobs have grown nearly twice as fast as employment over all, contributing to the economic recovery. But rapid growth has created new problems. Some say restaurants have grown faster than demand, causing a glut of competition that is another source of pressure on business owners.

Restaurant owners are also worrying about increased immigration enforcement: Nearly 20 percent of workers are foreign-born.

With unemployment at a 17-year low, businesses everywhere are struggling to find workers. Fast food is feeling the pinch acutely, especially as one important source of workers has dried up. In 2000, about 45 percent of those between 16 and 19 had a job — today it’s 30 percent.

“We used to get overwhelmed with the number of people wanting summer jobs,” Mr. Miller said, adding that he now gets maybe a handful of such applications, at most. “I don’t know what teenagers do all summer.”

Gavin Poole, a 17-year-old senior at Montville Township High School in New Jersey, likes the idea of being his own boss — that’s one reason he created a small business out of after-school landscaping and handyman work. The money has helped cover his cellphone bill and the payments on the Jeep Wrangler he leased last year. “I want to be prepared for the future, because you don’t know, financially, what situation you could be in,” he said.

A recent analysis by economists at the Bureau of Labor Statistics found that an increased emphasis on education — and getting scholarships — had contributed to the decline in working teenagers, reflecting both the rising costs of education and the low wages most people that age can earn.

Now, after years of benefiting from low-cost labor, many employers are starting to pay more. Fast-food wages began rising in 2014, and have increased faster than overall wages since. But at $10.93 an hour, the pay is still less than half the average for an hourly employee, pushing companies to offer more incentives — like dental insurance, sign-up bonuses and even travel reimbursement — to entice workers.

That’s good news for workers like Juan Morales, who has assembled sandwiches at a Subway on Staten Island for more than 15 years.

“It’s much better than before,” said Mr. Morales, who earns a little more than $15 an hour. “But for my boss, I see that it’s harder.”

Restaurants are notorious for churning through employees. But people are coming and going faster than they have in recent memory, according to data from TDn2K, a restaurant research firm. Last year, the turnover rate reached 133 percent, meaning that positions often had to be filled more than once.

That has forced business owners to adjust.

Tamra Kennedy, who owns nine Taco John’s franchises in the Midwest, started offering $100 as a bonus to new employees who reached 100 hours. She has started offering merit increases twice a year, and she pays all employees more than the minimum wage.

“Hiring has been more challenging in the last two years than probably the previous 10,” Ms. Kennedy said.

About half of her stores are understaffed. So she has devised workarounds: Digital probes, not people, now record food temperatures. She has also invested in expensive new registers that can produce reports that employees used to do by hand.

“I’ve never seen the industry in this kind of situation,” said Robert S. Goldin, a partner at the food consulting firm Pentallect. “It’s never been like this.”

Labor costs are rising, according to an estimate from Dean Haskell, a partner at National Retail Concept Partners, a restaurant and retail consulting firm in Denver. Mr. Haskell analyzed public financial filings from 15 major chains and determined that those companies spent about $73 million more on labor last year than the year before.

McDonald’s has announced that it will expand its tuition-reimbursement program, committing $150 million over five years to tuition reimbursement for employees who work at its stores for at least 90 days. Before, the requirement was nine months.

That $150 million might seem like a lot. But replacing workers is also expensive: It costs about $2,000 to replace the average hourly restaurant worker, according to data from TDn2K.

“Thirty years ago, I would not put up with the stuff I put up with today,” said John Motta, a longtime Dunkin’ Donuts franchisee in Nashua, N.H. When an employee recently missed a shift, one of his stores could serve only drive-through customers for about an hour.

“You try not to be too harsh on them,” he said, “because you’re afraid tomorrow they’re not going to show up.”

Free America Network Articles

Leave a Reply

Next Post

Son of American detained in North Korea speaks out

As President Trump touts his administration’s ongoing negotiations with North Korea, the son of one of the Americans detained in that country is preparing for semester finals in Southern California and waiting for good news. “We are hopeful,” Sol Kim, the son of detainee Tony Kim, told CBS News on […]