Seated in a leather booth at Jalapeño’s Bar and Grill in Boise, Irma Valdivia scrolls through text messages from one of her servers. Forty-five and short in stature, she wears a Chanel pearl necklace nestled against a silky brown shirt — the uniform of a successful businesswoman. “I will now only be working as follows: 5:30 to close Wednesday, Thursday and Friday,” she reads in a deep voice. “Old Irma would have told her, ‘Monique, that’s not gonna work out, thank you and best of luck.’ New Irma says, ‘I gotta figure how to keep her on at least one or two days.’ ”
Amid an uneven economic recovery and the lingering pandemic, many workers have proven reluctant to go back to their jobs, making them a prized resource and something like an endangered species. Depending on who you identify with, either they’re behaving like greedy squirrels hoarding unemployment insurance nuts or like prey that, for once, get to turn the gun on the hunter. Business owners and managers ponder how best to lure a server out of their living room: With bonuses? Increased wages? Time off?
Economists, meanwhile, rattle off the factors holding workers back. Fear of being exposed to a new strain of the coronavirus ranks high on the list, even with vaccines widely available. Low pay, lack of benefits, rigid work schedules and the difficulties of child care follow.
What’s clear is how this scarcity manifests itself — a labor crunch that has hit businesses like a gut punch, especially in the hospitality sector. As of August, the unemployment rate for bar and restaurant workers was 8.7%, about three percentage points higher than the overall rate, according to the Bureau of Labor Statistics.
Jalapeño’s is an exception. The company could use some extra hands for busy shifts, as “hiring” signs indicate. But most of about 100 employees have come back to work for the three-restaurant chain in southwestern Idaho. The Valdivias credit years of building trust with workers, giving them a voice and, more recently, generous financial incentives.
“They actually treat this restaurant like it was their own,” says Leticia Valdivia McLaughlin, Irma’s sister and business partner.
Employers that supported workers prior to the pandemic are less likely to be affected by the shortage, labor experts say. Their financial recovery has also been quicker, putting them in a better position to cushion future economic blows.
“All of these things will probably help them be a step ahead compared to other employers who may not be doing the same thing,” says Yannet Lathrop, a senior researcher and policy analyst at the National Employment Law Project, a research and advocacy group. Jalapeño’s may provide a blueprint for other small businesses that hope to keep attracting employees, even in the midst of a public health crisis.
Watching Irma climb into her sleek black Range Rover, you could be forgiven for guessing that she comes from money, though she built her business from scratch. The SUV’s rear plate reads, in black letters, “PATRONA,” a Spanish term for a female boss. But she wasn’t exactly born with a silver spoon in her mouth. She grew up in a family of 10 children, raised by Mexican immigrants who toiled away in the fields around Boise in the 1970s. Later, she and her brothers worked for an uncle who owns a restaurant and the family was inspired to start their own.
Irma partnered with her sister, and they settled on a Mexican cantina. After opening the first location in Nampa in 2006, they expanded with another in Boise three years later. In 2019, they opened a third store four blocks from Boise State University. Each sibling manages a location, but they often make important decisions as a team. This doesn’t mean that they agree on everything. In March 2020, their partnership was put to its biggest test yet.
Near the end of that month, Idaho’s governor issued a stay-at-home order to limit the spread of the coronavirus. The Valdivias faced a tough choice: Would they remain open and provide curbside orders or shut down indefinitely? How many employees would they keep? Sitting in a freezing-cold office, they went back and forth. “It was like beating a dead horse,” says Leticia, 51.
Mike, a baby-faced 37-year-old, favored shutting down, worried about getting himself or his staff exposed to the virus. His sisters, however, preferred to stay open as long as they could — as long as their employees were on board.
Businesses across the country had to make similar choices. When researchers surveyed 5,800 small businesses about their response to the pandemic, they found that those in the food service industry cut payroll by more than half, according to an article published in the Proceedings of the National Academy of Sciences. More than 1 in 3 restaurant workers filed for unemployment in the spring of 2020, according to the Bureau of Labor Statistics.
In the end, the Valdivias agreed to disagree. The sisters stayed open and Mike ended up closing his location. On the last day, his roughly 20 employees filed out of the restaurant, carrying bags filled with perishable food. The workers who most needed the money — those with mortgages and families — were sent to another location to help fill pickup orders. Those who were still in high school volunteered to go on unemployment, as did some of the younger workers at the sisters’ restaurants.
A few days later, Katy Marrow, 29, and a handful of employees gathered around Leticia in the kitchen of her restaurant. They’d have to go on unemployment for now, until the Valdivias worked out how to bring employees back safely. But all agreed to come back to work as soon as they could, coronavirus or not.
Marrow had been in the service industry for over 10 years but had never been furloughed. Suddenly, she had to worry about successfully applying for benefits. “It was a scary thought — being without money or a job,” she says. She soon learned that the additional $600 provided each week under the Coronavirus Aid, Relief, and Economic Security Act amounted to just half of what she made in tips.
But the money wasn’t all that she missed. At Jalapeño’s, she found working conditions a world apart from the corporate restaurants where she’d worked. “We’re all a lot closer,” says Marrow. After only two weeks, she put on her black uniform T-shirt and headed back to work, right as the restaurant settled into a new rhythm. Masked cooks prepared meals for her to pack into as many as four boxes. Phone lines were added to keep up with the growing volume of calls. Online ordering became an option. The patio in front of the restaurant was reconfigured to serve as a drive-thru. Loyal customers streamed by, picking up $30 foil containers filled with tacos and leaving generous tips behind.
There’s a central thread running through the tapestry of complaints voiced by business owners since the economy surged back to life, alongside supply chain backlogs and vaccine mandates: Workers don’t want to work anymore. The alleged culprit? Unemployment benefits. In the eyes of many, would-be employees would rather stay at home and game the system.
A few months ago, 26 states — 25 controlled by the GOP, including Idaho, Wyoming, Utah and Arizona — picked the stick over the carrot and discontinued some or all supplemental programs enacted by Congress, including a measure that provided supplemental unemployment benefits until it was discontinued in September.
Yet, these states saw no noticeable increase in job growth compared with those that maintained the aid, The Wall Street Journal found. Workers in the 22 states that ended all additional benefits in June were only slightly more likely to find a job, according to a team of economists. It’s possible that some “workers earning more with enhanced unemployment insurance benefits than they did working may have decided that low-paid jobs weren’t worth the risk in the middle of a pandemic,” says the National Employment Law Project’s Lathrop. But the takeaway shouldn’t be that low-paid employees are slackers. If anything, she says, “it does say something about how depressed wages have been for a long, long time.”
Employers in Utah and Wyoming pay tipped employees a paltry minimum of $2.13 an hour, with tips making the difference to reach the federal minimum wage of $7.25. The minimum cash wage is slightly higher in Idaho, but residents there have struggled with soaring housing costs due to an influx of transplants, says Jan Roeser, an economist at the Idaho Department of Labor. Idahoans earning minimum wage must work 96 hours a week in order to rent a two-bedroom home, according to the National Low Income Housing Coalition, a policy group.
For many hospitality workers, compensation is only part of the puzzle, as the pandemic brought about a moment of clarity after years of putting up with unfair treatment. Customers can be stingy on tips, or at best, uneven. Bosses are often poorly trained to supervise teams and default to using pressure as a management tool. Sexual harassment has long plagued the sector, as has wage theft.
Heather Lynn Smith, 37, worked for about a decade at the front desk of an economy hotel in the Houston area, part of a national chain. She kept pleading for an hourly raise of $1.50, but it was denied over and over again. After the hotel reopened in May last year, the owner provided gloves and masks only once and refused to say whether she would keep employees who fell sick with COVID-19. “It was just a very toxic environment,” says Smith. All the while, she worked a second full-time job as a truancy officer at a local junior high school, until she and her husband, who also had a job, were able to pay off some debts. Quitting became an option. Finally, in September, she left.
A recent survey of 30,000 job seekers by Joblist, an online job-search platform, found that 38% of former hospitality workers were seeking to transition out of the industry. More than half said no incentives would lure them back.
This is a teachable moment for employers, says Rosemary Batt, a professor in human resource studies at Cornell University. “The pandemic has taught all of us that health and family come first, and many have chosen that over making more money,” she says. “So employers need to focus on the quality of jobs and daily working conditions: health and safety above all, paid sick leave, predictable schedules — which very few front-line service workers have.”
It may not require an extreme makeover. She reports that employers who provided a predictable schedule prior to the pandemic were shielded from high turnover once it hit, according to research by her students that has yet to be published. That history also helped such employers bounce back financially more quickly.
One difference between Jalapeño’s and other businesses is that it provides more than a paycheck. It provides a “support system,” Irma says.
The Valdivias throw birthday parties for employees’ kids — when they’re not babysitting them. The owners pitch in to clean toilets and help the cooks cut chips. They’ve stopped counting the number of times they’ve given a stranded server a ride.
Irma says she acts as a mother, a mentor, a car dealer and sometimes as an immigration attorney for her employees, most of whom are Hispanic. “Once you set that foundation — how you’re going to treat your employees and how you’re going to be good to them, they’re willing to trust you and stick with you a little bit,” says Mike.
But the Valdivias have recently turned to more traditional means to hold on to employees. They used hundreds of thousands in loans provided by the federal Paycheck Protection Program to pay bonuses. They moved to permanently increase wages by up to 30%, passing some of the cost on to consumers. Chefs and dishwashers earn around $20 an hour, and servers are paid about $6 an hour before tips. Workers also have more flexible schedules now. They’ve been able to take vacation time this summer even as Jalapeño’s readied itself for a busy comeback season. One employee took at least two days off to take care of a sick cat.
But there’s a flip side to the new economic reality, which is that employees get to call the shots. “They have the upper hand now — 100 percent,” says Irma. Because of that, some feel like they can push the limits. One worker who injured his hand in off hours told her he’d take the rest of the week off. Servers sometimes text at the last minute to request time off on busy Saturday nights. These days, Irma has no choice but to go along with it.
Yet she sees most of these changes as overwhelmingly positive. She’s the first to acknowledge that, historically, Mexican restaurants were built on the back of cheap, immigrant labor, and likes to think her family is at the vanguard of more humane management in the industry. She’s also come to realize there’s more to life than her own job — she’s gone so far as closing her location on Sundays, like her siblings. A single mom, she’s started going on dates again.
At the same time, she’s achieved prosperity in part through the devotion of her employees who, by their own accounts, have known nothing but hard work all of their lives. Now, she wonders, what happens when the old guard, the workers fiercely devoted to their jobs, retire?
Take Jose Toro, Leticia’s chef of nine years. At 53, he stands in the kitchen eight to 10 hours a day, working the grill in Death Valley-like temperatures, without complaining. “Where are you going to find that quality of employee,” Irma says, “and still not pay them $30 an hour?”