Brian Kingsford, Owner, Bacaro Restaurant & Dave Levesque, Owner Brewed Awakenings joined The Coalition Talk Radio to discuss the critical challenges facing the Hospitality Industry, the Rhode Island Economy and The Nation Writ Large at the onset of a Post Covid ? Economy. Mr. Levesque formally presented, and explained his innovative approach to a burgeoning crisis: The inability of employers to fully staff businesses as both the structure and demand for goods and services begin to approach a Pre Covid Level. By restructuring the payment of unemployment insurance (See Link Below), creating an incentive for both employees and employers to return to full capacity.
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The Proposal!
An exigent crisis is facing the American Workplace. Unemployment benefits, coupled with Federal relief funds, are in many places outpacing the traditional wage structure that was the engine for business function. The result? The marked inability for businesses to fully staff their storefronts … choosing between crippling price increases or shortened opening times.
Nowhere has this been felt more urgently than bricks and mortar retail … with a focus on the Restaurant Industry. Facing this challenge personally, Rhode Island Restauranteur Dave Levesque has developed an innovative plan … bridging the wage gap, incentivizing the return to work that businesses need to attempt to some form of normalcy. Legislation is being discussed, with a sense of urgency, for the current legislative session.
Rhode Island Back to Work Incentive Legislation (“RIBWI”):
Many companies in Rhode Island are having a difficult time finding employees to fill the entry-level
positions required to run their operations. In restaurants, hotels, bars, deli’s, and many other industries,
entry-level workers are finding because of enhanced unemployment benefits, they can make more money not working than they can by working. Many restaurants are not able to get back to normal hours, or in some cases not able to even reopen, because of staffing shortages. Because tourism and the related business revenue generated in Rhode Island makes up such a large part of our economy, and with the summertime just around the corner, it’s important for both businesses and the State to figure out how to capitalize on revenues from tourism this summer season by keeping businesses open and Rhode Islanders working. Our businesses and the State will be at a major financial disadvantage if we are unable to get Rhode Islanders off unemployment and back to work where they are needed, so time is of the essence to get short-term legislation passed to help make this happen.
Rhode Island has over 2,900 restaurants as of 2018 (eating and drinking locations) with over 57,000
jobs as of 2019, which is 11% of the employment in the State and $2.7 billion in sales as of 2018 (data
obtained from the National Restaurant Association). With the hospitality segment hit so hard by the
restrictions under the pandemic, it is important to fast-track the proposed RIBWI legislation, so we are
able to maintain the major economic force that our restaurants and other hospitality businesses provide
to our State economy.
Rhode Island’s unemployment rate as of February 2021 is at 7.3% compared to the National
average of 6.3%. This places Rhode Island with about 40,000 people unemployed according to the BLS
current population survey (CPS). Some figures show this rate even closer to 8%. The Rhode Island
Restaurants and Hospitality sector should be part of the solution for lowering this percentage. There are
open jobs RIGHT NOW that cannot be filled because of a lack of wiling workers in many categories of the restaurant and hospitality industry, like cooks, bartenders, waiters and waitresses, counter staff, baristas, sandwich makers, dish washers, shift supervisors, assistant managers, managers, maintenance staff, drivers, and others. The Rhode Island restaurant and hospitality sector of close to 2,900 establishments could easily right now hire back over 5,800 employees if willing workers could be found, which would bring the Rhode Island unemployment rate down to a level approximately equal to the national level of 6.2% unemployment or even lower. How good it would feel for Rhode Island to be on the list of one of the lowest unemployment levels for a change! We think we have a way to help accomplish that goal through the RIBWI legislation we are proposing.
Legislation Outline:
Under the proposed RIBWI legislation, Rhode Islanders that have been on unemployment will now
receive assistance to get back into the work force rather than stay at home. The legislation is designed to
give a greater incentive to get back to work, rather than to be paid to stay out of work.
The proposed legislation would be in effect only for the next two quarters (actually two 13-week periods).
It then can be evaluated to determine if it needs to be continued. Anyone on unemployment will only be
allowed to enroll in one 13-week program.
Example:
Based on a full-time (40 hours) $11.50 minimum wage rate calculation, collecting unemployment is
60% of this wage at $276.00 per week. The federal Government is adding in an additional $300.00 per
week, for a total of $576.00 per week being collected in unemployment benefits now for a minimum
wage worker, as compared to $460 being earned by that employee at minimum wage. So entry-level
minimum wage workers in Rhode Island right now make $116 more per week staying home than working.
The RIBWI plan would add in $150 to the week’s wages for a full-time employee making less than
$15 per hour, for 13 weeks. And the employee would have the ability to earn another equal $150 per
week ($1,950.00) at the end of the 13 weeks if they maintained employment during the entire 13-week
period. Using a minimum wage worker at $11.50 as an example, an individual would earn $460.00 from
their employer for a 40-hour work week, and in addition receive weekly incentive pay from the State of
$150.00 for a total of $610.00 per week for a 13-week period. At the end of the 13 weeks, the State of
Rhode Island will kick in an additional incentive check for $1,950, equivalent to another $150 per week
(prorated on less than 40 hours worked for part timers), bringing the weekly compensation to $760 over a 13-week period, almost $200 more per week than collecting unemployment.
The new plan is a positive for the workers.
• The new plan would pay a full-time minimum wage worker an additional $184 dollars/week as
compared to collecting unemployment with the $300 supplement (after the lump-sum $1,950 is
paid by the State at the end of the 13-week period).
• The new plan gives workers a chance to take the step to get ahead and move into a job.
• The new plan would give employers additional workers, which is the biggest issue many
businesses face in these times in not being able to hire enough workers to operate their
businesses, especially in the restaurant and hospitality industry.
The new plan is a positive for the State of Rhode Island.
• It puts Rhode Islanders back to work.
• It gives workers a helping hand and the ability to move forward in the workforce.
• It helps employers gain additional workforce needed to grow and maintain business.
• It helps employers be competitive against unemployment benefits, which benefits in entry-level
jobs actually encourages unemployment.
• The plan benefits the State of Rhode Island in many ways:
o Currently the State pays $276 out for an unemployment claim based on a full-time worker at minimum wage and receives no labor related taxes for this unemployed person during this time.
o An employed minimum wage person and his/her employer will pay a combined estimated
$34 in taxes to the State.
o The tax collected from the employee working, and the $276 no longer being paid out to the
working person, is a total of $310 weekly saved/raised by the State of Rhode Island, for a
total of $4,036 dollars over a 13-week period. The payout from the State to a worker under
the proposed RIBWI legislation is $3,900 over a 13-week period, $136 dollars less than what
the State is paying out in unemployment benefits and not receiving in taxes, so for the 13
weeks an employee is on this program, the State of Rhode Island would take in about $136
per full time employee more than it would have paid them to stay at home plus what it was
losing in taxes.
o Based on 5,800 possible jobs at a minimum being filled, the State will actually make
$788,800.00 for the 13-week program (not considering the source of the temporary
unemployment compensation supplement).
o 5,800 people off unemployment for a year using minimum wage pay rate, would save the
State of Rhode Island $43 million annually.
Rhode Island Back to Work Incentive Details:
• Any individual collecting unemployment can qualify for the “Rhode Island Back to Work Incentive” program.
• The State of Rhode Island will initially incentivize an individual to take a position with a company for
employment and be paid by the State up to $150 per week based on 40 hours worked, and prorated for
less than 40 hours. This would be paid out weekly based on the previous week’s hours worked and verified by the employer.
• As additional compensation, if the employee maintains the job for 13 consecutive weeks, the State of
Rhode Island will issue an additional check for another $150 per week (up to $1,950 based on 13 weeks of full employment and prorated for less than 40 hours of work).
• Termination for cause or quitting will not allow for the additional compensation.
• If termination was considered “just cause” under the State of RI laws, additional compensation will be
prorated until the date of termination.
• The employee will be allowed to continue the program under another employer if the employee changes jobs.
• The employer will be required to complete weekly forms and submit them to the State of RI for the
employee to be entitled to compensation.
• The employee will also be required to complete weekly forms and submit them to the State of Rhode Island for the employee to be entitled to additional compensation.
• Taxes for incentive compensation will be paid by the employee under the same guidelines that currently are imposed for unemployment compensation under applicable laws.
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