Independent restaurants are already in a perilous situation—and it’s about to get a lot worse
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Dining remains the hardest-hit industry for unemployment as a result of the COVID-19 pandemic, based on the latest figures published Friday in July’s jobs report.
One in four U.S. jobs lost during the pandemic have been in restaurants and bars, and the total jobless rate sits at 10.2% as Congress continues to debate a second stimulus package and a replacement for expired $600 unemployment benefit. The U.S. Bureau of Labor Statistics (BLS) jobs report found the total number of unemployed Americans stood at 16.3 million in July, an improvement from the 23.1 million unemployed in April as some states have, at least partially, reopened their economies.
And yet, independent restaurants have only received approximately 8.1% of Paycheck Protection Program (PPP) dollars despite facing the worst job losses across major industries, according to the Independent Restaurant Coalition (IRC). The grassroots organization, led by a number of chefs and restaurateurs nationwide, warns that 11 million independent restaurant employees will lose their jobs forever without immediate action.
“The July employment report shows that PPP isn’t working for restaurants, and another loan program won’t work either,” the IRC wrote in a statement on Friday. “PPP was an eight week solution to an eighteen month problem, and we need additional relief from Congress urgently to ensure there are jobs we can return to next year. Restaurants are already in more debt than ever before, paying back PPP loans, suppliers, or our employees. One in three are expected to permanently close by the end of the year. We need grants to help offset the cost of reopening when it’s safe to do so.”
Most states provide unemployment benefits up to 26 weeks, but supplemental $600 checks each week from the federal government have proven critical for millions of out-of-work Americans to continue paying their bills since mid-March. However the federal unemployment funding expired at the end of July, and Congress hasn’t moved any closer to renewing unemployment benefits anytime soon. While some states have stepped in to offer extra unemployment funding for as much as 20 extra weeks, without additional unemployment funding as the pandemic continues and many businesses remain shutdown, millions of Americans are at risk of defaulting on rent, mortgages, and other bills as well as just putting food on the table for their families.
Restaurants and bars, especially when compared to other retail businesses, have struggled with reopening, whether it be trying to comply with constantly changing regulations for outdoor seating and installations to just getting patrons to social distance and wear a mask when possible. The effort has become so overwhelming for many businesses that they re-closed altogether rather than putting their employees’ physical and mental health at further risk.
Even for dining establishments that can reopen, many states still prohibit indoor service in order to curb the spread of COVID-19, and those that can serve outdoors often have to reckon with mercurial summer weather between heat waves and torrential storms passing through. Al fresco dining is running against the clock as permits for extra curbside and parking spot seating are set to expire in September and October as many cities anticipate car traffic to pick up again once summer is over. Even for restaurants that survive that long and are financially able to install outdoor heat lamps (despite their energy consumption), winter is still coming, and outdoor dining will not be feasible in many regions at all, reducing service back to takeout and delivery.
While there has been more of a spotlight on the restaurant industry’s problems in the last few years—especially on the treatment of female employees in the wake of the #MeToo movement—the pandemic has further exposed deeply-engrained misogynistic and racist attitudes, prompting some leaders in the industry to call for a complete overhaul of traditional business practices when a complete reopening is possible.
On Thursday, 50 restaurant owners—including Tom Colicchio, David Chang, and Danny Meyer—publicly proposed the “Safe and Just Reopening Plan,” developed in partnership with One Fair Wage, a nonprofit led by advocates for restaurant workers to end the sub-minimum wage for tipped workers.
The four-point plan calls for the elimination of the sub-minimum tipped wage, allowance of tip sharing with back-of-house and kitchen staff (which is legal elsewhere, but not in New York despite extending that benefit to other industries in January), payroll tax relief, and the establishment of a 5% safe reopening surcharge that restaurants can charge.
The surcharge coupled with tip sharing are critical as restaurants struggle to get back on their feet but also commit to paying a full minimum wage, rather than subsidizing wages by tips, which many critics have called out as an inherently racist practice that also perpetuates sexual harassment. One Fair Wage president Saru Jayaraman told Eater that restaurant owners moving toward eliminating the tipped minimum wage—which wouldn’t happen overnight but rather over the next five years—would require more legislative support, which is why the plan also advocates for tip sharing and surcharges.