Low unemployment great for employees, not so much for some employers
By Khalida Sarwari
Not long after employees of Pasta Pomodoro in Sunnyvale’s Cherry Orchard Shopping Center were notified via text message that the restaurant chain was closing indefinitely, management posted a sign on the window announcing the sudden closure to the world.
Less than a week later, three more fliers were posted right underneath that sign, but this time by local pizzeria chain Amici’s—to advertise that it was hiring. It was almost as if the universe was indirectly telling Pasta Pomodoro employees, “Don’t worry, when one door closes another door opens.” And if the proliferation of “Help Wanted” signs in the region is any indication, there are plenty of open doors.
While financial difficulties reportedly forced Pasta Pomodoro to shutter all 15 of its Bay Area locations recently, numerous other local eateries are staying in business by taking advantage of California’s climate to offer unique flavors and using social media to entice customers. But where they have been less successful is in finding and retaining employees.
Many employers in the food and retail industry say it’s just not as easy to retain hired help as it used to be. According to Sharokina Shams, a spokeswoman for the California Restaurant Association, these challenges appear to be driven by competition for labor, particularly from tech companies.
“Restaurateurs have told us that the cafeterias at big tech companies are hiring workers at really relatively high pay rates,” she said, sharing an anecdote about a restaurant employee who went on to make upwards of $27 an hour at Facebook. “So if there’s truth to that, that dollar amount is not sustainable for an independently owned restaurant anywhere in the Bay Area.”
The minimum wage increase is another cause of frustration for owners of full-service restaurants, Shams suggested. While servers and bartenders who bring in tips stand to gain from a bump in their salary, higher minimum wage prevents restaurateurs from paying their kitchen staff—who are already making more than minimum wage to adjust for the fact they don’t earn tips—more.
“So when the minimum wage climbs up a little bit, the ones making tips see an immediate increase,” said Shams. “Where restaurants express frustration is they say…it leaves sort of little wiggle room to try to get the cook a raise or the dishwasher a raise.”
Amici president and co-founder Peter Cooperstein can attest to these challenges. The last few years especially have been a difficult time to hire people, he said, and it seems the pool of candidates is continuing to shrink.
“I think the challenge is just that fewer people are looking for work” in the restaurant business, Cooperstein said.
His concerns are echoed throughout the Valley. Emily Hetzel, general manager of Willow Glen Creamery, said she used to get her fair share of high school and college students coming in and inquiring about employment opportunities. Not anymore.
“I don’t know where they’re looking (for work) these days,” she said.
For David Sizemore, manager at Deluxe in downtown San Jose, “Hiring people is the easy part; keeping them is the hard part.”
Though many employees at his relatively new restaurant have been there since it opened in October 2015, some have quit soon after realizing they weren’t making enough in tips, he said.
Stephen Levy, director of Palo Alto-based Center for Continuing Study of the California Economy, said the reason employees are selective about where they work boils down to the number 3.5. That’s the unemployment rate in the South Bay, the lowest percentage in the past 15 years. The current economic climate closely mirrors that of the dot-com boom, he said.
“In 2000, you had exactly the same thing,” he said. “There were massive ‘Help Wanted’ signs; it was a sign of economic health. It’s (once again) a sign of the great job surge and the low unemployment and the low wages relative to housing costs. When there are lots of opportunities, it’s harder to hire people for low wages.”
So who stands to gain from this regionwide economic vitality? Employees, especially those looking for work in the service industry, said Tony Bartenetti, president of business development and strategic partnerships at Nelson Staffing. The company is working with Levi’s Stadium to help it hire cashiers and event specialists.
“It’s a candidate-driven market,” he said. “Right now, if you’re paying at minimum wage it gets to be a challenge to find people, because they can find $13 to $14 paying jobs. It’s a strain on these production firms that are running on thin margins to have to introduce an additional $2 that some other companies are paying for talent.”
While that poses a challenge for employers, it’s good for employees, Levy says. As he put it, “why should anybody kill themselves to come to Palo Alto to make $13 an hour” when they can’t afford to live anywhere near there?
Not settling for less, it’s not uncommon now for employees to have one foot in the kitchen and the other out the door, so to speak. Sizemore admitted he had a former employee who went to work for another restaurant. “Poaching is a big thing,” he said. “The poaching thing is probably up there as far as big issues. (But) the game is the game.”
Cooperstein has seen employees divide their time between Amici’s—where wages range from the minimum $10.50 to $20—and other gigs where they can make money, such as Uber and Lyft.
“We definitely have lost pizza drivers who say they can make more money working for the Ubers of the world, and we have managers who are working part time for those companies currently,” he said. “They’re still at Amici’s, which is interesting. We have some pizza drivers drive on other days or at night for Amici’s and during the day for Uber, so it’s kind of an interesting thing that we didn’t have to contend with years ago.”
And while some employees leave their job at Amici’s to pursue school or their careers after they’ve graduated, others have left to work in the cafeterias of Google, Apple and Oracle, Cooperstein said.
The high cost of living and long commutes are other reasons workers are leaving their jobs, and sometimes the region altogether, Levy said. But for all the talk of the exodus that is supposedly underway due to skyrocketing housing costs and transportation challenges, the Bay Area remains an attractive region to live and work in, he noted.
“It is a very high-income, high-spending community,” he said. “We will continue to outpace most places in job growth. The baby boomers will retire, but we’ll still outperform. This is a still surging economy really dominated by the growth plans of the large companies.”
On the hunt
Levy predicts that while the area’s tech giants continue to prosper, smaller companies—particularly those in the service and hospitality industries—will have to find creative ways to retain workers, such as by offering higher wages and benefits or introducing “labor-saving devices” like tablets that customers can use to browse the menu and place orders.
In the meantime, companies are finding that instead of relying on people hunting for jobs they need to go hunting for workers. Which is easier said than done, Bartenetti said.
“Every day it’s getting at looking at how are we sourcing for talent? What type of creative things can we do to generate a database of candidates that are placeable in the Bay Area and California? It’s a challenge.”
Nelson Staffing recruiters’ strategy involves trying to cover as many bases as possible, from traditional means—passing out fliers at community group meetings and among church groups—to advertising on social media, and everything in between. What might work in one city won’t always work in another, Bartenetti said.
“It varies by market,” he said, adding that networking has proven to be an effective strategy across the board. “Having a solid community networking effort is huge. You get a lot of referrals that way.”
In the case of Willow Glen Creamery, management will often go to local colleges and universities to advertise job openings. Last fall, the ice cream shop switched from a banner to a wooden sign on the sidewalk advertising job vacancies, because the banner wasn’t getting attention from drivers on Lincoln Avenue, Hetzel said. The shop has also started a new wage campaign where employees start at close to minimum wage but receive a raise every 60 days.
Down the street, Aqui Cal-Mex has a flier on its storefront that gives a detailed breakdown of how much line cooks, dishwashers and cashiers can make at the beginning and once they’ve worked their way up to management positions. The flier mentions that open interviews are held daily in the afternoon.
Sports Basement in Campbell promises not only “competitive wages,” but also “medical, dental and optical coverage, 40 percent discount and free rentals, free skiing, camping and cycling trips and race reimbursements” among other perks.
Sizemore said he gives his employees 50 percent off their shift meal and offers to buy them a meal or drinks when they’ve had an exceptionally good or bad day.
And then there’s Amici’s, which saw an opportunity in the form of the Pasta Pomodoro closures and pounced on it. In addition to the shuttered Sunnyvale location, Amici’s has posted signs in English and Spanish at the Mill Valley and downtown San Jose restaurants promising “great tips, flexible schedules and free meals” for servers and cashiers, and guarantees cooks, pizza makers and dishwashers an opportunity to train and earn more money.
“It’s terrible; you hate to see any business close and you hate to see any employees out of work,” Cooperstein said. “The good thing for the employees is that the job market is so good right now I don’t think they’ll have a whole lot of trouble finding jobs, whether it’s at Amici’s or any of the other restaurants in the Bay Area.”
Some might say it was a bold tactic by Amici’s, but it seems to have worked. Cooperstein admitted “several” Pasta Pomodoro employees expressed interest in jobs at Amici’s and within two weeks, the company had already hired three former Pasta Pomodoro employees.
Matt Wilson contributed to this report.