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The reason that there is a worker shortage in the U.S. restaurant industry is that employees decided to make “life changes” as they went through the pandemic, a prominent chef told the Federal Reserve on Friday.
“This is the time for people to evaluate what their priorities are and I think a lot of people wanted to make life changes and we lost a lot of people to different industries,” said Cheetie Kumar, the owner of Garland restaurant in downtown Raleigh, N.C.
Kumar said she has had to raise wages to keep workers.
“Right now, we don’t really have anybody who makes less than $18 an hour,” Kumar said.
Kumar said the restaurant industry was a “fair target” for criticism about how workers were treated. She said there had to be “a change in the Zeitgeist.”
No longer will restaurants “be able to get by and pay people $13 an hour, and expect people to stay with us for years and years,” she said.
Kumar is well known, having been a semifinalist for the James Beard Foundation’s “Best Chef: Southeast” award three times. She spoke at a Fed event to hear experiences of businesses and charities during the pandemic.
Worker shortages have presented a conundrum for the Fed. It is not just an academic interest. The Fed is trying to gauge what level of interest rates is needed to keep the economy on even keel.
Fed Chairman Jerome Powell said he’s never seen an economy that combines so many reports of labor shortages with so many unemployed workers.
At the start of the pandemic, Powell set a goal of returning the job market to its strong pre-pandemic strength, when the unemployment rate was 3.5%. The Fed thought that keeping the economy running “hot” via low interest rates would create conditions needed for workers to find jobs.
But it is dawning on the central bank that this goal of a 3.5% unemployment rate might be a mirage, something that appears possible but is not in fact so, because the COVID-19 pandemic has altered the economy in permanent ways.
Read: Fed should start to slow down bond purchases in November, Mester says
Employers report across the country that they can’t find workers and in many ways, the labor market appears “tight,” Powell said earlier this week.
Many economists are urging the Fed not to raise interest rates quickly and give the labor market more time to heal.
But many others warn that the surge of inflation seen this year may last and do damage to low income workers, if the Fed continues to keep interest rates low.
Read: Kansas City Fed chief says pre-covid economy is not coming back
The Fed has set returning to “maximum employment” as a standard before the central bank will lift its benchmark interest rate off of the zero rate.
Stocks
DJIA,
SPX,
were lower on Friday as bond yields moved higher in the wake of the Fed’s meeting this week.
