Economic trends affecting South Padre Island restaurant
As the Rio Grande Valley's economy continues to rebound from the pandemic, South Padre Island is on track for a record year.
But as small business owners are starting to see more customers walk in their doors, some are seeing more employees walk out.
Cody Pace says his family has run Tom and Jerry's on South Padre Island since 1996. Like other restaurants, the pandemic affected how they operate, most recently, a lack of staff.
On a normal day, the restaurant staffs close to 60 people. As recently as June, that number was down to 20.
Pace says extra pandemic unemployment benefits played a role in their lack of help.
"We had a lot of people that didn't want to come to work because they were getting paid to stay home," Pace said.
On June 26, Gov. Greg Abbott ended additional benefits, like the extra $300 a week, and help for self-employed people.
Dr. Salvador Contreras, an Associate Professor of Economics and UTRGV, says additional benefits did play a factor, but that's not the whole story.
"In May, we see that the state started seeing flattening out in initial jobless claims, for example," Contreras said. "Bottoming out in June, coinciding with the program's end. Yet, claims are up in July."
According to the U.S. Bureau of Labor Statistics, the Valley's top four employed industries make up half of the Valley's workforce. But of the 22 industries tracked, those rankings drop dramatically when measured by average pay. By that metric, restaurants go from fourth most-employed industry, to dead last in wages.
Contreras says that plays a bigger role than unemployment benefits. One factor: People feel their work is worth more, especially as prices rise on everyday goods.
"We've all seen inflation go up," Contreras said. "We know, for example, the price of fresh milk is up to 7.5%. Used cars are up 45%; gasoline is up 45%.
The second factor: Big chains are hearing that message.
"Nationwide chains are offering better wages and benefits to their employees, any purported shortages of workers is just an employer's unwillingness to pay the new asking prices."
Raising wages and adding benefits is something Pace says has brought his staffing levels back to normal.
"If you want to get good staff, you got to pay them good because they deserve it." Pace said. "I mean they work very hard. There's no more paying anybody $7 or $8 or whatever the minimum wage is. You have to pay at least 11, 12, $13."