California companies scale up advantages to attract workers – Silicon Valley

By Grace Gedye | CalMatters

The plea came out on Instagram: Cultura Comida y Bebida was understaffed. Carmel-by-the-Sea restaurant could no longer deliver its Oaxacan-inspired lunch and might have to cut an evening of dinner service if it wasn’t able to hire more kitchen staff in the week. Thus, the owners have opened a referral bonus program to the whole community. Anyone who introduced them to someone they ultimately hired was given a $ 200 gift card. The new employee would too.

“Literally, if one more person,” said Sarah Kabat-Marcy, one of the restaurant’s managing partners. “I don’t know what we’re going to do.

After five years of low sales, the restaurant has lost several employees in the past two months to larger operations, including luxury hotel restaurants that could pay the kitchen staff $ 37. hour, says Kabat-Marcy. She and her husband Michael Marcy, who is also a managing partner, have increased their kitchen staff salaries by 20%. Now kitchen staff earn between $ 20 and $ 23 an hour. They deserve it, she said, and the cost of living is high in the coastal city. But there’s no way they can match the salaries of larger operations, she said. Profit margins are too thin; the restaurant would collapse.

In the meantime, hostesses and waiters have volunteered to help in the kitchen. The chef’s retired parents even came to help bake tortillas. The restaurant narrowed down its menu based on conversations with the kitchen staff about the easiest dishes to prepare. Neither Kabat-Marcy nor her husband have drawn Cultura paychecks for over a year. Kabat-Marcy took a second job during the pandemic so the couple could pay their bills.

“We are just at the end of our tether with the totally exhausted staff,” she said.

California workforce shortage

State enterprises bounce back, but find it difficult to fill vacancies, especially in the service sector. Several factors may be at play, including the increase in unemployment benefits, uncertainty around childcare and concerns about exposure to COVID-19. Workers may also try to start new careers or move to jobs with more regular hours, better working conditions and better pay. But the gap is there. According to state data, employment only increased by 24,500 in June, even as employers added about 73,500 non-farm jobs, meaning thousands of positions remained open.

This translated into a boon for the workers. In the past three months, wages for California workers in the leisure and hospitality industry have grown much faster than those of all private workers. Between March and May, the most recent period for which data is available, the average wages of private sector employees increased by 1.2%, while wages of leisure and hotel workers increased by 5. 7% according to the US Bureau of Labor Statistics.

Dara Maleki, owner of The Pizza Press, a newspaper-themed pizza chain with 15 branches in California, says that for every candidate he receives, “there are five employers looking for the same person.”

Yet workers in the service sector are paid much less than workers in many other industries. The average weekly wage for California leisure and hospitality workers in June, for example, was around $ 600, according to the Bureau of Labor Statistics. For all private workers, it was almost $ 1,250.

Dara Maleki, owner of The Pizza Press, a newspaper-themed pizza chain with 15 locations in California, says for every candidate he receives, “there are five employers looking for the same person.”

This is a sharp turnaround from last year, when the shelter-in-place statewide order and the subsequent pandemic restrictions caused massive layoffs in the service sector. In April 2020, the US hotel industry lost approximately 7.7 million jobs, or about half of the workforce, according to federal data. California experienced a similar loss. In April 2020, the number of people working in the hospitality and leisure industry fell by more than 45%, according to state The data.

Now employers are scrambling to rehire these workers. Some compete for candidates by raising salaries, suspending incentives, and adding perks that have not typically been offered in the food and service industry.

Hiring incentives

Reign Free, founder and CEO of Red Door Catering in Oakland, struggles to fill around 15 positions. One of the challenges, she says, is that part-time child care workers can actually make more money from unemployment benefits.

Free already offered its staff health benefits, vision and dental coverage, unlimited time off and a free lunch every day. Now, she plans to expand employee mental health coverage and bring a yoga instructor on site for a class once a week.

Larry Cromwell, owner of Salons Maribou, a chain of four salons in Folsom and Roseville, says he always wanted to let stylists own shares in the company. When he saw salons close and stylists leave the industry during the pandemic, he knew he had to have a competitive employment program.

Cromwell raised the price of salon services twice, which resulted in a higher salary for the stylists in Maribou. He also started a program that allowed stylists to buy 1.6% of the company’s stock if they met several criteria – related to the number of clients they see in a month, for example, and their booking change rate – and whether they demonstrate leadership qualities. They receive quarterly dividends, and as the business grows so does the value of stylists’ stocks. At present, the chain has five stylists who are shareholders and are trying to motivate more to qualify and join the program.

Another advantage that Cromwell had over many salons when competing for new applicants is a 401 (k) program that he launched in January 2020. More than half of stylists are enrolled in the program, which Maribou corresponds to 4. %.

Employers are increasingly offering 401 (k) matching programs and pension plans, says Vinny Catalano, senior vice president of employee benefits at Lockton Companies LLC, a large insurance brokerage firm. He says young workers express a great deal of interest in being able to plan financially for their future. “Employers are starting to react to this. “

Eventually, Cromwell hopes to add health coverage to its employees. “It’s a tough question,” he says, because the costs have gone up so much.

“It’s like the holy grail. If I could do it, I would be in Heaven.

Cromwell said adding health benefits now would eat up what is left of his low profit margin. But he still hopes to make it work in the future. “If it’s one of the last things I do, I’m going to get it.”

Retention and flexibility at work

The difficulty of hiring is not concentrated in one region or industry.

This is the number one problem that Scott Miller, CEO of the Fresno Chamber of Commerce, says he has heard of from member companies. Some do daily standing interviews, where people can show up and be interviewed on the spot without having applied – something Miller says he’s never seen before in his career.

In Redding, companies face a similar situation, says Michelle Nystrom, regional manager of O2 Employment Services, a recruitment firm. Hiring has become so difficult that it has caused the employers she works with to focus on retaining their current employees with extra pay.

It also sees workers, including those in the manufacturing sector, demanding flexibility or expressing an interest in working from home. “For some sectors, COVID has shown them how flexible they can be. For other industries, it has shown them how difficult it is to be flexible, ”says Nystrom.

Some manufacturers are considering offering alternative work weeks, such as four 10-hour days or half-days on Fridays. Others plan to offer their employees paid volunteer hours that they can use for approved activities, including helping in their children’s schools.

“For jobs like manufacturing, they never had the luxury of attending their children’s shows or school trips,” Nystrom said. “It’s a bit of a big deal.”

Signing bonus

Mitchell Sjerven, owner of Cap, an upscale restaurant in downtown Santa Barbara, had to close his restaurant twice during the pandemic and each time laid off staff. The first time, in the spring of 2020, he was able to rehire all his staff. After the second stoppage and the layoff, some staff moved to different jobs. Now he is missing three out of 26 employees.

To fill these positions, Sjerven increased salaries by 20%, and in some cases by 30%. He started offering $ 100 as a signing bonus. Then he increased it to $ 250 and then to $ 500. Now he’s giving away a $ 1,000 signing bonus for line cooks. But, he says, the incentives didn’t work as he hoped; they mainly caused workers to change restaurants rather than attracting more workers to the industry.

In the meantime, he says, the majority of the new restaurants he sees succeeding have reduced their labor costs, by offering counter service, for example, or by focusing on take-out. He thinks the plug could lag behind the success of the full-service restoration model.

“I’m not going to put iPads on the table for you to order so you don’t have a waiter,” Sjerven says. “I’m not going to put robots in the kitchen to cook duck.”

As wages rise in the industry, Sjerven hopes customers will understand that their food – and the pleasures of interacting with humans – will come with a higher price tag.

Grace Gedye covers California Economy for CalMatters. Previously, she was an editor at Washington Monthly. She graduated from Pomona College.


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