Pandemic Forces Restaurant Industry to Rethink Wages, Tip Credit

This article was written by Nancy Lunu with NRN

As restaurants slowly return to dine-in service where they can, thousands of jobs have been restored. But how restaurants view and pay their workforce is evolving. Many chains and independent restaurants have used this time to reset when it comes to labor efficiencies and wages. 

Industry watchers say the pandemic and the Black Lives Matter movement have amplified the ongoing debate about paying restaurant workers a living wage and the inequities between the front and back of house, especially in “tip credit” states.

“I do think wages will be going up whether it’s federally mandated or not. We are going to have to up the wages we pay to attract a better-quality person,” said Frank Tucker, a restaurant consultant and former global chief people officer at Taco Bell.

That trend is playing out in some states in the full-service sector, according to a late August workforce report by restaurant analytics firm Black Box Intelligence.

The average state saw an increase of 5.2% in hourly wages for line cooks in the second quarter compared to the same period last year, according to Black Box, which uses line cook wages as a key indicator because it excludes the effects of tips.

Specifically, Rhode Island, Indiana, Kansas, Michigan and Virginia experienced the largest year-over-year increases in hourly wages for full-service line cooks during the second quarter, the firm said.

“With the exception of Michigan, these increases are entirely market driven and not the result of minimum wage increase,” Black Box said.

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