Business Update - Weekly Digest (September 22, 2021)
Even before the pandemic, some restaurant owners were challenging the model of paying servers only $2.13 an hour and depending on tips from customers to make them whole. Today, as restaurants and bars struggle to find enough workers to stay open, a few are making further changes to their business model. Some are raising wages and offering signing bonuses. Others are adding service charges to every bill, and others are simply including tips in the price of food to enable them to pay workers a higher hourly wage. A few are making changes with scheduling to bring balance into their employees’ lives. With more than half of restaurant workers considering leaving their jobs, these changes may help to stem an exodus of employees.
TAX MATTERS
Are you still waiting on a tax refund from the IRS? A backlog of returns, a workforce shortage, technology difficulties, and a higher rate of errors on returns mean that it may take the IRS up to 120 days to issue refunds. Although the IRS says it has processed all error-free returns received before April, pandemic-related challenges combined with the expanded child tax credit, missing information, and possible identity theft continue to delay refunds. Even the Taxpayer Advocate Service (TAS), a service that helps taxpayers resolve issues with the IRS has been overwhelmed by the demand.
THE GREAT REASSESSMENT
When a key employee resigns or is fired, that can set off a chain reaction which management experts call “turnover contagion,” where other team members leave in quick succession. This may happen when a well-liked and respected team leader leaves, and the remaining team members don’t mesh well with the next leader, or when a company scraps a popular workplace policy such as flexible or remote work. Mass resignations seem to happen more frequently in times of uncertainty, such as the ongoing COVID pandemic. To counter a mass exodus, employers should clearly communicate the reasons employees are leaving, especially if the departure is non-work related. Increasing wages for remaining team members can also help, even if it cuts profit margins for the short term, but those increased wages may stave off even bigger losses if an organization loses too many employees to operate.
Addressing workplace burnout will also help to counter the great resignation. According to a recent survey, 87% of employers said burnout and stress were issues for their employees. In response, many companies are offering new and expanded mental health benefits to employees. These benefits include access to counseling, meditation apps, and simply providing the example of leaders paying attention to their own mental health.
Employers who rely on software to screen candidates may be unwittingly excluding many qualified candidates. Automated job applicant screening software is often configured to exclude applicants with lengthy resume gaps or whose skills do not exactly meet defined criteria. However, that detailed screening process can lead to difficulties in hiring for some positions. Companies such as IBM, Amazon and JPMorgan Chase have been trying different methods to reach out to candidates who had been eliminated from consideration by screening software. Other small companies are reverting to manual screening methods to find candidates.
ECONOMY
Even with the delta variant rising across the U.S., retail sales rose 0.7% in August, surprising many economists. However, sales at restaurants and bars stayed flat while online sales soared 5.3%. Back-to-school shopping may have helped retail sales as many children returned to school for the first time in more than a year.
For about 41% of Americans, financial security in retirement is “going to take a miracle.” According to a recent survey, 36% believe they will never have enough money to retire. A top concern is that increased government spending due to the pandemic may lead to future decreases in Social Security benefits. Many younger workers reduced retirement contributions or took withdrawals from their accounts.
The strange economics of gas stations mean that even with gas prices at a 6-year high, station owners barely turn a profit on sales of gasoline. The average profit on a gallon of gas is only five to seven cents per gallon, and tight competition between stations means that owners are reluctant to raise their prices when wholesale prices increase. Most profit comes from retail sales inside the store, where the profit margin on some items can be as high as 53%.
