Some businesses facing a labour shortage blame workers, but these employers boosted pay instead — and found hiring was easy
By restaurant standards, Hillary Drago is something of a statistical anomaly.
The manager of Pizzeria Libretto recently raised the pay rate for her staff above inflation. In the coming months, she'll introduce a health and dental plan that employees can sign onto that includes physiotherapy, massage therapy and mental health services.
Since the lockdown measures were lifted, restaurant owners have been candid about their inability to find workers, citing an ongoing shortage of cooks and servers. But at Pizzeria Libretto? We haven't had much of a problem hiring," Drago says.
Competitive pay makes restaurants like this one stand out in a crowd of short-staffed employers. Across industries, businesses are facing a significant shortage of workers and it is threatening their ability to operate at full capacity. Yet after a bruising 14 months of on-again-off-again lockdowns, few are willing to pay more to attract new staff.
Wages have risen at a sluggish pace since the pandemic began, data from Statistics Canada shows. The average hourly wage in Canada was $29.19 in July, marking a small 1.1 per cent increase since January 2021 and an even smaller 0.3 per cent increase since April 2020.
The glacial rate at which pay has grown exists primarily in the food services and construction sectors. Hourly wages for all food service workers grew by $0.55, from $16.80 to $17.35, between February 2020 and June 2021. Wages for construction workers went up by $0.30, from $25.50 to $25.80, according to Statistics Canada.
Many businesses are scrambling to maximize profits at the lowest possible cost to make up for lost time. While consumer demand has grown, staffing remains below pre-pandemic levels and pay remains mostly stagnant.
About 246,000 people who left their jobs at the outset of the pandemic haven't returned to work, data shows. The bulk of those people worked in food services and construction.
Some of those workers have simply found other jobs in other sectors. If you've been laid off three times (in the restaurant industry), chances are you're going to look for a more secure job," David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives, recently told the Star.
But the shortage has presented a staffing problem for businesses, some of whom have even called on the government for help to get workers back.
That's why Adam Colquhoun, who owns Oyster Boy, recently boosted employee wages. The diner near Trinity Bellwoods Park on Queen Street West had 24 staff prior to the pandemic - servers, delivery people and line cooks. It emerged from the last lockdown with just seven employees.
Finding new staff wasn't so straightforward when the lockdowns lifted in late June and early July. Suddenly all these restaurants were hiring at the same time," Colquhoun said.
The restaurant's only real way to attract workers was to offer more, he said. So he advertised higher hourly pay, from $15 to $17 on average, and a $1,000 retention bonus after three months.
The new incentives helped Colquhoun recruit 12 workers in two months.
Jason Rosso, owner of Brampton-based gastropub J. Red & Co. Food + Drink, said his company had little choice but to do the same. He increased the wages for all employees between $3 and $4 an hour. New line cooks, positions that typically make minimum wage, were signing contracts at $23 an hour.
I've never paid that much for line cooks before. But what else were we going to do?" asked Rosso. The restaurant industry has shrunk exponentially. The talent pool has disappeared. So people can ask for that kind of money now."
Rare as they are, wage hikes have emerged during the pandemic for a variety of reasons - sometimes to retain workers, sometimes to improve public relations, or sometimes just to thank employees for toughing it out.
Among the big box stores, Costco quietly paid out a pandemic bonus to its staff for almost a year before replacing it with a permanent raise. The starting hourly wage for an employee is now $16 per hour, a Costco spokesperson previously told the Star. If employees stay long enough, the figure rises: the average wage at Costco is now $23.71, and after six years a typical cashier earns more than $60,000 a year.
Most grocers, including Loblaws and Metro, chose to end hero pay" a few months into the pandemic. Sobeys owner Empire Group, however, reinstated its pandemic pay after a hearing before Parliament over wage fixing.
These raises might help boost employment in the food services sector, where the demographic is young and turnover is high, but other areas of the economy are facing labour shortages that wages alone can't seem to fix. In the construction industry, for example, some skilled trades are facing tremendous difficulty retaining workers as many reach retirement age.
The pandemic didn't cause this shortage so much as exacerbate it, says John Mollenhauer, president of the Toronto Construction Association. By the end of the decade, more than 260,000 skilled workers will have retired with fewer than 220,000 new workers to fill their jobs, he says. Since February 2020, the sector lost more than 78,000 workers.
The labour shortage will grow in severity in the coming years," Mollenhauer said. Efforts to entice school age kids into the trades have been lacklustre at best."
With a few exceptions, businesses are unlikely to raise wages in the coming months regardless of the labour situation, says Jim Stanford, a senior economist at the Centre for Future Work.
Many of these businesses experienced a challenging year and a half, so they're reluctant to pay for labour. It would be a good thing if wages pick up, but I'm not confident they're suddenly going to rise on their own accord."
For those that did raise staff pay, the new expense comes from a tricky and oft-avoided business decision - raising prices on consumers.
Since lockdowns measures were lifted, Drago says Pizzeria Libretto has raised its menu prices by a dollar or two per item.
If we're going to pay people more money, which they deserve, then those labour costs have to go into the price of the menu," she said.
Increasing prices often makes restaurant managers nervous. Drago admittedly wondered would customers still come here at this new price point?"
She was pleasantly surprised when people flocked to the pizza joint, regardless, when lockdowns lifted.
Honestly, we haven't heard a peep from anyone about this," she said.
Jacob Lorinc is a Toronto-based reporter covering business for the Star. Reach him via email: jlorinc@thestar.ca