The People Report Workforce Index that measures expected market pressures on restaurant employment posted the highest level of staff recruiting difficulty in the fourth quarter since the measure was established in 2006.
While fourth-quarter overall index slipped to 71.4, from 75.2 in the third quarter, the recruiting difficulty component rose sharply, to 88.9, from 78.6 in the third quarter.
The Workforce Index is produced by Dallas-based People Report, a division of TDn2K, and is based on surveys of human resources departments and recruiters in the restaurant industry. The index has a baseline value of 50, with results over that level indicating increased pressures on five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover. Results are based on expectations for the quarter underway.
“Recruiting difficulty is at the highest level we’ve seen since we started tracking it,” said Michael Harms, TDn2K executive director of operations.
“We’ve seen the labor pressures building over these past few quarters, and it’s really culminating in this difficulty of finding workers,” Harms told Nation's Restaurant News Tuesday. “The recruiting difficulty numbers for almost every company are through the roof.”
The fourth-quarter Workforce Index marked its sixth consecutive quarter of posting a reading higher than 70. The employment expectations component remained high for the quarter, at 81.3, and the turnover component crept higher.
High vacancy rates and high turnover numbers all feed into the recruiting-difficulty numbers, Harms said. “Pressures have increased to where today we are seeing sky-high turnover rates and increased demand for workers and a diminished hiring pool,” he added.
During the third quarter, the U.S. unemployment rate fell to 5.1 percent in September, from 5.3 percent in June. That compares to a 5.9-percent rate in September last year.
The quarter saw the overall U.S. economy add 501,000 jobs, with 70,800 of those in the foodservice industry.
Foodservice has created 349,000 new jobs in the past 12 months, People Report noted.
“There has been increased chatter about the decreased labor participation rate artificially lowering unemployment numbers,” Harms said. “But now economists are questioning whether that change is permanent, in which case we’re nearing full employment. That would further acerbate these challenges that we are seeing.”
In the fourth quarter, the People Report survey found 64 percent of its participating companies expected to add hourly staff, and no companies planned to reduce hourly staff. At the management level, 60 percent of companies expect to add staff in the quarter.
Overall Workforce Index rankings by industry category for the fourth-quarter report were mixed when compared with the third quarter:
• Quick service fell to 76.6, from 81.2.
• Limited service/fast casual/family dining inched up to 70.5, from 69.5.
• Casual dining fell to to 66.3, from 74.3.
• Fine dining/high volume declined to 70.7, from 74.4.
“Operators are faced with a clear choice,” Harms said. “They can close their eyes and hope for the best and wait for this to pass. Or they have to be prepared to deal with these rising turnover rates and increasing vacancies.
“Looking further out,” he added, “it may be a necessity to make sure not only their compensation offerings are competitive but they may have to re-evaluate their entire employment proposition to make sure it’s aligned with the needs of the changing workforce.”
Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless
