A new banner outside McDonald’s at 2703 Union Ave. advertises $13.50-per-hour wages for “team members” and $17 for shift leaders.
Inside, Debbie Cook is collecting her latest paycheck, reflecting the $13-an-hour rate she’s being paid as a full-time shift manager after eight years working here.
Her bosses have promised she’ll receive a raise soon to reflect the new pay rates, but she’s not planning on sticking around, she said. Friends at the grocery store she used to work at let her know the store is looking for a new full-time assistant manager, whom they’ll pay $17 per hour. She’s hopeful her application will be accepted.
Fast facts
- There is currently an unprecedented number of jobs being advertised in the U.S. and companies are struggling to find workers to fill them.
- Because of this, wages are rising quickly, especially in low-pay service jobs like in restaurants and grocery stores.
- Local fast food workers MLK50 spoke with are being offered significant raises to switch jobs.
- Tommie Vasser, a shift manager at a local Burger King, is hoping taking a job at Five Guys or McDonald’s could mean enough money to fill his refrigerator and buy his 3-year-old the train he wants at Walmart.
- Though Tennessee and other states stopped distributing federal unemployment assistance — in an effort to push people toward jobs — it’s unlikely to restore pre-pandemic conditions.
- About half of the women who left the labor force during the pandemic haven’t returned, as the lack of in-person schooling and childcare options continues to impact the economy.
As the sole provider for two adult sons who are mentally ill, Cook said the extra cash would go a long way toward her being able to make ends meet. McDonald’s offers health insurance to shift managers, but Cook couldn’t afford to add her sons to the policy.
“(A raise) will help me out a lot,” said Cook, 55. “I have to make sure their meds are taken care of, as well as paying bills and everything else.”
Paying bills isn’t a matter Cook takes lightly. During her time at the world’s largest restaurant chain, she’s been evicted three times — a “horrible experience” she never wants to face again.
There is currently an unprecedented number of jobs being advertised in the U.S. — 9.2 million as of May, the most recent month for which the U.S. Bureau of Labor Statistics has data — while there are about 2.6 million, or 1.5%, fewer people who are either employed or say they’re looking for work than there were in 2019. Because of this, there is only one American looking for work for every advertised job, a rate it took about eight years to reach after a peak of 6.9 in 2009 during the Great Recession.
To be sure, the available jobs don’t necessarily match the qualifications or geographic location of the people looking for work, but the rate conveys a jobs market nearly as tight as the one that existed pre-pandemic.
These conditions are leading to rising wages, especially in low-pay service jobs like in restaurants and grocery stores.
The unusual labor dynamics have raised concerns over inflation, frustrated employers, and sparked a national debate over unemployment payments. For people like Cook, though, it’s brought a potentially life-changing opportunity.
‘People had the opportunity’
The “labor shortage” has dominated local and national discussions about the economy in recent months, as restaurants, hotels and other businesses have struggled to return their staffs to pre-pandemic levels.
It’s the primary reason given by Tennessee Gov. Bill Lee and the 24 other governors who decided to stop receiving and distributing the extra $300 per week unemployment money the federal government made available early in the pandemic. Federal payments ceased in Tennessee last week, taking payment back to the state level of $275 a week.
This strategy assumes there are many people who would be working if not for the assistance. Some local restaurant operators and employees said they agree that this is the case.
“People (were receiving) the unemployment money and just (leaving),” said Aldo’s employee Omar Garcia.
Kris Robertson, whose family owns Automatic Slims and four other local restaurants, said he thinks workers will return soon because of the extra payment cutoff.
“They don’t want to come to work because they’re getting that money,” said Robertson. “I think everyone will start coming back to work after (the federal unemployment assistance ends).”
However, other local restaurateurs, an economist and economic data point toward a more complex reality.
In Shelby County, only about 7,000 — or 1.7% — fewer people were employed in April 2021 than in April 2019, and 16,000 more people say they’re looking for work now than then, according to the Bureau of Labor Statistics. With this low number, it seems unlikely there are enough workers sitting at home to fulfill the seemingly endless demand local employers currently have for service workers.
Many former restaurant workers aren’t collecting unemployment. They’ve moved into higher-paying jobs, according to Ryan Trimm, who owns several restaurants, including the Cooper-Young staple Sweet Grass.
“People just get stuck (in restaurants). … Last year was an opportunity for them to move on and get real estate licenses and degrees,” Trimm said. “I know a lot of my cooks have gone off and gotten warehouse jobs or construction jobs.”
Reid Dulberger, president of the Economic Development Growth Engine for Memphis & Shelby County, thinks many workers have likely left a service industry that struggled during the pandemic for industries that thrived during it, and typically pay better, such as warehousing.
“While some sectors truly did shut down, others were booming,” said Dulberger, the chief economic advisor for the mayors of Memphis and Shelby County. “People had the opportunity to get a new job in a higher pay range.”
In the U.S., hand laborers and material movers — the largest subset of warehouse and transportation workers — are paid a yearly average of $33,700, while restaurant workers earn an average of $24,100, according to the Bureau of Labor Statistics. In Memphis, hand laborers and material movers have an average income of $31,400 per year, while restaurant workers are paid $23,200.
For the workers who did decide to stop working during the pandemic, it’s unclear how many will return to jobs and when. Dulberger thinks some will return after the extra unemployment money runs out and some will go back in the fall when in-person schooling is expected to fully resume.
“Some people are home taking care of their kids,” Dulberger said. “Some people are out of the market because they’re afraid of being sick. … Some people are out of the market because the government has made it possible to be out of the labor market for a while.”
The decrease in schooling and childcare options during the pandemic pushed millions of women out of the labor force, and only about half have returned, according to the Bureau of Labor Statistics. From January 2020 to June 2021, the percentage of U.S. women who were either working or looking for work decreased from 57.8% to 56.2%.
Dulberger is confident that it will take the labor market a while to find a new equilibrium, and employers in service industries will likely have to keep raising wages to attract workers.
Raises available
Tommie Vasser, a 24-year-old who works at the Burger King across the street from Cook’s McDonald’s, was sweeping the parking lot recently when a district manager from Five Guys next door stopped him.
He’d noticed Vasser was wearing the uniform of a shift manager and wanted to poach him.
As a shift manager at Five Guys, Vasser would make $14 per hour, which is $2 more than his current wage. And, Five Guys offers health insurance, while Vasser’s Burger King doesn’t for shift managers.
With that extra money — or especially if he could convince Cook’s McDonald’s to pay him the $17 on its sign — Vasser said he wouldn’t have to worry so much about money. He’d be able to buy his 3-year-old the $65 train he wanted so badly, put more food in the refrigerator, stop borrowing money from family so often and maybe move out of Orange Mound, where his unoccupied car was recently shot.
In Memphis, $12, $14 and $17 per hour all lie between a $7.38 “poverty wage” and a $20.92 “living wage” for a household like Vasser’s, where both parents work to support three children, according to the Massachusetts Institute of Technology’s Living Wage Calculator. In other words, Vasser is not one of the 138,000 Memphians — 75% of whom are Black — living in poverty according to federal guidelines, but he has a long way to go before he’ll be able to afford all of his expenses.
Before accepting the Five Guys offer, Vasser said he’s going to talk to McDonald’s and see what other jobs are available elsewhere.
As employers — especially those in lower-wage industries — are striving to recruit employees, service workers like Vasser have more bargaining power to land raises than they’ve had in years.
And with this power, more U.S. workers than ever are deciding to quit their current jobs, which seems to be a smart financial decision. While employees who stay in their positions are seeing a 3.1% year-over-year bump in wages, job switchers across all industries are getting a 3.9% boost, according to the Atlanta branch of the Federal Reserve.
Locally, Half Shell owner Danny Sumrall said he’s had to start offering $20 per hour for new cooks, and other restaurants are offering sign-on bonuses of up to $1,000.
The job market is “just nuts,” Sumrall said. “We’re all struggling … to make sure we have enough people.”
Dulberger said it’s nearly impossible to predict the long-term effects of this labor market. For now, though, it’s a great time to look for a new job.
Jacob Steimer is a corps member with Report for America, a national service program that places journalists in local newsrooms. Email him at Jacob.Steimer@mlk50.com
This story is brought to you by MLK50: Justice Through Journalism, a nonprofit newsroom focused on poverty, power and policy in Memphis. Support independent journalism by making a tax-deductible donation today. MLK50 is also supported by these generous donors.