If service sector employers ever want to see their workers again, they have to do more than raise wages. They’ll need to help people get ahead.

Starbucks barista
A Starbucks barista fulfills an order in a South Philadelphia store, before more than 8,000 branches nationwide will close this afternoon for anti-bias training, in Philadelphia, Pennsylvania Mark Makela/Reuters
  • The hospitality industry is struggling to fill open positions.
  • The sector can attract new talent by investing in education and training.
  • The “skilling up” of employees will also better prepare workers for a rapidly changing labor market
  • John Fillmore is President of Chegg Skills.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

Not so long ago, things were looking up for the hospitality industry. The robust introduction of vaccines caused the lifting of many COVID-19 related restrictions, and it seemed like the worst was over for America’s restaurants, cafés, and bars. But the contours of another crisis are coming into view.

Early in the year, a mere 8% of restaurant operators listed recruitment as their top challenge, but by April, that number shot up to a staggering 57%. A survey published earlier this month by Joblist confirmed that an earthquake was happening: a third of former hospitality employees said they will not be returning to the sector, citing poor pay and lack of benefits. Further confirmation came from a study from UC Berkeley’s Food Labor Research Center finding that more than half of current hospitality industry workers were seriously considering leaving their jobs.

What is to be done to save the industry from freefall? The obvious answer, of course, is wages. And thankfully, we’re seeing much-needed improvement on that score, with the industry recording a normal year’s worth of pay raises in June alone. But if you listen to employees, current and former, you learn that money alone cannot solve the problem.

For that, we need something more powerful – a shift in the mindset, a radical reimagination of how we approach hospitality jobs that includes both a living wage and opportunity for further economic mobility.

Just look at white-collar industries, which have long understood that investing in their employees and building up loyalty required much more than just competitive wages: it meant investing in employees’ career development, even though some employees would apply those new skills in different jobs. Service sector businesses may now need to think about making a similar leap, offering clear and visible paths to career growth both within and outside the organization.

The solution is education

Imagine working the night shift at a fast-food restaurant and feeling like you have no path to developing the skills necessary to have more economic options. Now imagine that your employer proposed helping you pursue academic studies, which are otherwise utterly unaffordable for far too many Americans.

For an increasing number of service sector workers, that dream is becoming a reality – not because of innovative government programs, but from an increasing commitment of private companies to support their frontline workers. Starbucks first partnered with Arizona State University in 2014 to allow its employees to earn their bachelor’s degree through ASU Online with 100% tuition coverage. ASU then worked through InStride to extend this offer to all companies.

Meanwhile, a slew of training providers have sprung up to help workers skill-up. Out-skilling platform LearnIn, for example, course curators OpenSesame, and employee-course matchmakers Guild Education – which works with organizations such as Walmart, Chipotle and Disney and has helped over three million workers gain access to higher education – are all carving out a significant space for themselves.

Guild reports that employees who used their services had a 93% retention rate six months later, compared to 56% for those who didn’t. And that for every dollar employers spent on education, they saw a $US2.84 ($AU4) return on investment. To put it in highly technical terms, a win-win.

Investing in education has implications that go beyond mere short-term financial gains. As automation continues to disrupt industries at a rapid pace, we may soon face a reality in which about 40% of US jobs are lost to machines.

And you can guarantee that it will be those in low-income jobs who are hit hardest. The only way to prepare for such a transition, and to avoid chaotic and disastrous socioeconomic implications, is to encourage those most at risk, like service sector workers, to acquire skills in new fields such as software development, data science, or UX design.

But the math just doesn’t add up to put them all through college. When you take $US20,000 ($AU27,189) tuition annually and multiply it by the six years it takes many to graduate, that adds up to a $US120,000 ($AU163,132) education (and often much more). With over 70 million Americans in low-wage service jobs, that would mean over $US8 ($AU11) trillion to try and meet all of our retraining needs through the traditional path. That affordability crisis means many people in service jobs will have had no real chance to develop formal skills in high-demand tech areas through traditional higher education.

As a result, millions of talented and motivated people are having their potential wasted by a system that is currently stacked in favor of those with resources. They need help. Hospitality businesses struggling to find new talent must now go back to the drawing board to provide them that help. By doing so, they will become enablers of economic mobility which, in the midst of the Fourth Industrial Revolution, joins climate change as one of the greatest challenges society must meet in the coming decades.

Companies should remember that the great ethos of the service sector has always been aspirational – that even the humblest entry-level job was always perceived as a testing ground for ambition and dedication and a gateway to bigger and better things. It’s why CEOs and movie stars alike take such pleasure in talking about their early, first jobs – not because they’re fortunate enough to no longer have to wait on tables or mop up behind the bar, but because they appreciate the first place that gave them a chance to prove their worth.

Let us, then, focus on precisely that: creating opportunities for employees to feel supported, empowered, and in control of their futures to re-ignite an America where individuals are constrained only by the power of their dreams and their dedication to making those dreams a reality.

Do that, and you’ll see an economic boom that extends well beyond our bars and restaurants, benefitting us all.