What's Causing the Labor Shortage?

Business owners and operators across the U.S. are dealing with labor shortages, and the restaurant and hospitality industry has been hit especially hard.

Although restaurant job growth shows no signs of slowing down, vacancies are becoming increasingly difficult to fill. The gap between job openings and and new hires in this industry have been narrowing for years.

And it’s not just some businesses being affected - everyone from small to large operations has reported feeling the strain of the labor shortage.

But why is this? Below are some explanations for the labor shortage and what you can do to bolster your business.


Ongoing labor challenges, such as a rapidly rising minimum wage, have been creating competition among operations. There is pressure to pay well but still turn a profit. It’s becoming increasingly competitive as job seekers and candidates search out the highest pay - which not all businesses are able to offer.


Politics and law also play a part in the labor shortage. According to the Pew Research Center, many cities with the highest concentration of restaurants, like New York City, Los Angeles, Chicago, D.C., and Miami, also have some of the highest concentrations of unauthorized immigrants. 

It's a fact that restaurants employ a higher concentration of foreign-born workers than the overall U.S. economy. Some workers are leaving certain states due to state and federal crackdowns on immigration, says a recent Associated Press report, meaning the restaurant and hospitality industries could be more negatively affected than others.


The number of teens in the workforce has collapsed since 2000. Increased competition for educational opportunities means more teens are remaining in school longer, going to college more often, and taking more summer classes - preventing them from entering the workforce.

In fact, the percentage of recent high-school graduates enrolled in college—both two-year and four-year—has grown by 25 percentage points, which is almost exactly the decline in the teenage labor-force participation rate.


As vacancies become increasingly difficult to fill, it’s important for employers to always be putting their hiring brand first in order to discover and attract the best possible talent. The most important thing to do is hire good people in the first place (pssst...we can help with that). The longer you can retain quality employees, the better your business will fare in the long run.

As for the rapidly-increasing minimum wage, that’s something you simply can’t control. However, you have some measure of control over what you offer employees. Maybe other businesses are out-bidding you in terms of wage. But think of creative ways in which you can attract good candidates, offering things that employees value like schedule flexibility, time off, and an engaging work environment. Play up your strengths in the job post and you may be pleasantly surprised by who walks through your door.