Q3 Workforce Index reveals sustained recruiting, turnover challenges in restaurants

Ron Ruggless | Oct 22, 2018 Nations Restaurant News

Recruiting remains a challenge for restaurants, and the third-quarter People Report Workforce Index registers how wide and deep the difficulty is.

“We’ve seen sustained levels for the past two or three years that we hadn’t seen in a decade or more,” said Michael Harms, vice president of operations at Dallas-based TDn2K, which produces the People Report Workforce Index quarterly.

“The percentage of companies reporting difficulty is high,” Harms said. “People are saying it’s almost impossible to staff a restaurant these days.”

The national unemployment rate fell to 3.7 percent in September, the lowest level since 1969, according to the Bureau of Labor Statistics. Meanwhile, the gross domestic product continued to rise from its 4.1 percent growth in the second quarter.

“The demand for workers sparked by this economic growth and low unemployment has resulted in a shortage of quality employees and record high turnover rates as workers are presented with more employment opportunities,” the third-quarter Workforce Index noted. “Barring a change to the macroeconomic environment, labor pressures are expected to remain high with increasing wage pressures posing an added complication.”

Harms said the People Report spent the past year revising the Workforce Index, which started in 2006 and measures expected market pressure on restaurant employment and is based on surveys of restaurant industry human resources departments and recruiters.

The Workforce Index now has a baseline value of 0 and ranges from -100 to +100. Values over 0 indicate increased levels of that component, and the strength of each value is measured by its distance from 0. An overall index value is calculated as a weighted average of the five components, including employment levels, recruiting difficulty, job vacancies, employment expectation and turnover.

For the third quarter ended Sept. 30, the overall Workforce Index registered a value of +26.9, indicating moderate increases in labor pressure.

Recruiting pressure seems to be highest in the quick-service segment, Harm said.

“They really are struggling to find staff,” Harms said. “It’s across the industry, but we really are seeing the struggle in QSR.”

At the hourly level, the turnover comparison remains significant across the segments, he said. It’s significant across most segments.

“Casual dining and upscale fine dining scored a little lower in the quarter,” Harm said. “Casual dining is in a tough spot. When it comes to competition, they are taking fire from upscale; they are taking fire from fast casual. They are surrounded by two of the industry darlings, and we’re seeing that in the demand for employees.”

Overall, Harms added, it remains difficult to find employees for all segments of the restaurant industry, a trend that has continued since post-recession labor pressures began about five years ago.

“Those challenges don’t seem to be going away any time soon,” he said. “This is the longest period of sustained labor pressures we have tracked.”