Part of the series “Viewpoints on Resilient and Equitable Responses to the Pandemic” from the Center for Urban and Regional Studies at The University of North Carolina at Chapel Hill.
The COVID-19 pandemic is causing people around the world to question how this virus will affect the many public and private systems that we all use. We hope this collection of viewpoints will elevate the visibility of creative state and local solutions to the underlying equity and resilience challenges that COVID-19 is highlighting and exacerbating. To do this we have asked experts at UNC to discuss effective and equitable responses to the pandemic on subjects ranging from low-wage hospitality work, retooling manufacturing processes, supply chain complications, housing, transportation, the environment, and food security, among others.
T. William Lester is an associate professor of city and regional planning at UNC-Chapel Hill. His research focuses on labor market policies and local economic development tools. He has conducted quantitative and qualitative research on the restaurant industry and is a former restaurant worker. He shares strategies for reducing the impact of the coronavirus on the service industry.
Transcript – Viewpoints on Resilient & Equitable Responses to the Pandemic. T. William Lester: Service Industry
As communities around the country move to close bars and restaurants, millions of cooks, servers, bussers and bartenders will have reduced hours or be laid off all together.
More than just restaurants. Hotels, personal service workers such as hairdressers, massage therapists and personal trainers—many of whom are self-employed—are without work.
This is a huge segment of the economy throughout the economy. Nationally, the Arts, Entertainment, Accommodation and Food Services Sector amounted to about $1.6 Trillion in economic activity. That’s about five percent of the total economy and larger than the Federal government.
As a fast-growing state, the restaurant industry is also vitally important in North Carolina. The food service industry includes:
Over 20,000 business establishments, employing over 400,000 workers, making it the single largest three-digit NAICS industry in the state by employment. It is also one of the fastest growing segments of our economy, and one that brings vitality and distinctiveness to local economies.
However, wages tend to be low in the restaurant industry. Especially in North Carolina where there is no mandated minimum wage at the state or local level higher than the federal rate of $7.25 per hour. This means restaurant workers are less likely to have savings to rely upon during this time.
The restaurant sector, with its high turnover and rapid growth, was also something of an economic security system in and of itself in other times of economic crisis. Workers who have been laid off in other sectors could readily find work in this sector. Young workers who are either still in school, or who may have advanced degrees but have not yet found higher paying work elsewhere have traditionally gravitated to this work.
Immigrant workers have also found a niche in this sector, and those who lack documentation will be ineligible for the kinds of government help being proposed today and are particularly vulnerable.
What can be done?
The main response in times of economic crisis is for the Federal and/or state government to provide direct economic stimulus. This is important not only to keep money flowing, but also for the government to serve as a backstop for household’s financial wellbeing. In addition to checks from the Federal Government, it’s important to massively expand and reform the UI system to allow for fuller wage replacement and even job sharing.
But in this situation with restaurants and bars closed, it can be hard for that stimulus to take effect because we typically expect that stimulus to be spent in the restaurant and retail sector, which are rightfully closed during the Pandemic.
So, this really is uncharted territory. We are worried that in the short run, a large number of restaurants are just going to go under. That’s a huge concern. Not only for the restaurant owners and employees, but for our ability to bounce back when this is over.
North Carolina could consider either a zero-interest loan program or a direct grant program that is targeted towards small, independently-operated restaurants using either Federal stimulus money or other sources. This kind of support for small businesses is needed to keep restaurants from closing permanently, which would have huge ramifications for commercial real estate and other aspects of the economy.
I’m worried that the larger chain restaurants will be better positioned to recover after this crisis is over. They typically have higher profit margins and better access to capital. The family-run establishments are going to have a hard time coming back, and government aid should be focused on these locally-owned small businesses.
Local and independently-operated restaurants, bars and food businesses are not only vital because of the jobs and tax revenue they provide for local economies, but there are a critical part of the economic development strategies of both our growing urban centers like Durham and Raleigh—which are attracting tech companies and talent from across the globe—but also to smaller towns in rural areas which are experiencing a revitalization driven by local food culture. Kinston, North Carolina is an example.
What can local government do during this Crisis?
Cities and counties can relax local regulations and allow restaurants to provide take-away and delivery services, including alcohol. Alcohol sales are a significant portion of revenue for traditional full-service restaurants. They can also relax hour restrictions for operating and selling food, wine and spirits.
The ABC could allow bars to sell liquor direct to the public, or to offer bottled cocktails or beer to-go.
They can change zoning laws (at least temporarily): This could allow restaurants to temporarily convert to “pop up” markets where they can sell semi-prepared foods and even uncooked items like vegetables, meats, and dry goods, and yes… even alcohol, to go. This allows them to market goods already purchased for in-house production but not needed in the face of reduced demand. This also helps ease pressure on grocery stores, which attract more people together in one place, and have seen “panic buying” which causes unneeded fear.
Local governments can also buy food directly from restaurants to provide meals for vulnerable populations (homeless, elderly, disabled), using local funds.
What citizens can do:
Support your local restaurants with take-out ordering, to the extent you can afford it.
Have virtual dinner parties where groups of friends all order take out from the various restaurants and turn on Skype or Zoom. Make a cool playlist to share for the party. Bars and restaurants provide more than just food and jobs, they provide the space for intimacy, human contact, celebration and the sharing of our culture. More than that, they are often the location where we tell stories; about ourselves, our families and our history. Let’s try to keep these good things alive during this crisis and make sure they are there when this is over.
Individuals can also donate to charitable organizations or funds that help laid off workers. One example is the Triangle Restaurant Workers Relief Fund.