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Written by Liz D’Aloia

During the 2015 Global Best Practices we heard about the political and economic trends that are impacting the restaurant industry. Here’s a summary of how these predictions may impact your labor budget.

Wages stagnated during the recession and subsequent weak recovery. Economist Joel Narnoff explained that wage pressure on employers is like a dam. He predicts that the dam could break very quickly in 2015 as unemployment rates fall below 5%. As of December 2014, unemployment was at 5.6%. Some economists believe that we area already at full employment. (Read more on Joel’s presentation here).

Check out this chart from the US Bureau of Labor Statistics. Does it bring back memories? Do you remember what it was like to recruit in 2004 – 2007? You were probably paying top dollar for talent and a sign-on bonus to boot. As the chart illustrates, we’re already back to 2004 unemployment rates.

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There are a several actions that business owners can do now to prepare for wage increases.

  • Keep tabs on municipal and state initiatives to raise the minimum wage. As we’ve seen, these tend to pass quickly and easily. Don’t get caught off guard.
  • Monitor your competition.
  • If you start to experience a lot of turnover, start doing exit interviews, even if they are informal. Just ask the employee the reason he or she is leaving. You may discover that the issue isn’t wages, and instead that it’s about schedules or a management issue. Fix underlying management issues quickly to reduce the risk of future turnover.
  • Check local employment advertisements and see if anyone is advertising higher wages or sign on bonuses. This is a sure sign that the dam is breaking and that wages are increasing.
  • Check your industry associations for specialized wage data information. If you’re in the restaurant industry you need to participate in the Workforce Intelligence (formerly People Report) consortium of human capital data intelligence. Workforce Intelligence (formerly People Report) creates monthly compensation data based on millions of data points specifically for the restaurant industry.
  • Are there ways that you can reward employees without increasing their base pay? Consider spot bonuses and team contests. This will reward performance and also give millennials the sense of purpose and community that resonates with them.

Finally, never forget that people quit bad companies, but they rarely quit great supervisors. Remember, it’s all about people, profit, and the planet. Focus on your people by making sure your supervisors are compassionate, inspirational leaders. Don’t forget about the bigger picture, either. We hear about how millennials enjoy a sense of community and want to be part of a bigger purpose. In reality, this isn’t anything new. Successful companies have always been able to distill their greater purpose into a concise mission statement. Then they train their leaders on how to articulate the mission and how to model the behaviors that support it.

Is your organization equipped for these changes? If not, reach out to the Black Box Intelligence (formerly TDn2K) team. They are well connected and have plenty of resources to help you. Get ready now.

1f8e46dLiz D’Aloia is the founder of HR Virtuoso, a mobile recruiting company based in Dallas, TX. She is an HR professional, employment attorney, speaker, and blogger. Prior to launching HR Virtuoso Liz worked at national transportation companies and at a global retailer. Connect with Liz on LinkedIn and follower her @hrvirtuoso.

Event photos captured by Steph Grant | www.stephgrantphotography.com