During the COVID-19 pandemic, the U.S. restaurant industry was hammered by shutdowns, capacity limits, and a shaken workforce. Federal relief poured billions into helping businesses survive. Yet a glaring imbalance emerged: restaurant owners received far more financial support than the workers who actually kept the industry running.
A new report from One Fair Wage and the Food Labor Research Center at UC Berkeley reveals that, on average, restaurant owners received 30 times more federal COVID aid than their employees—many of whom struggled to cover rent and groceries throughout the crisis.
This disparity highlights a troubling dynamic in an industry already notorious for low pay, precarious work, and stark inequalities, especially for tipped workers—disproportionately women and women of color—who earn below minimum wage.
A Tale of Two Realities: Owners vs. Workers
Since March 2020, restaurant owners accessed a range of relief programs including the Paycheck Protection Program (PPP), the Restaurant Revitalization Fund, and the Employee Retention Tax Credit. Combining these, an average restaurant owner with fewer than 500 employees could receive up to $775,000 in grants, loan forgiveness, and tax benefits.
Meanwhile, workers could only tap into two much smaller safety nets: federal unemployment insurance and stimulus payments. Many found these programs difficult to access, with less than 60% receiving unemployment benefits several months after the pandemic began. For those who did qualify, total assistance averaged at most around $26,000 over 74 weeks—far less than what their employers obtained.
Why the Gap?
The persistent subminimum wage for tipped workers—set federally at $2.13 per hour for over 30 years—plays a key role. This wage structure leaves workers vulnerable: many earn so little officially that they struggle to qualify for unemployment benefits. In addition, underreported tips and wage theft reduce the documented income on which benefit eligibility is based.
Restaurant owners, led by large corporate chains and their powerful lobby, have consistently opposed raising tipped wages, maintaining a workforce among the lowest paid in the country. Congress has largely complied, allowing industry bailouts with few protections tied to worker pay or treatment.
The Human Cost: Why Workers Are Leaving
The report paints a stark picture of worker hardship and dissatisfaction. Many who were locked out of relief programs early on were forced back into high-risk jobs. By late 2020, tipped workers reported declining tips, increasing customer hostility, health risks, and harassment. Enforcing COVID protocols often led to fewer tips, intensifying stress and insecurity.
Consequently, a “mass exodus” from restaurant work has occurred. Nearly one million workers have left the industry during the pandemic. Of those remaining, over half say they plan to leave, and 76% say the only reason they would return is if they received a full, livable wage with tips on top.
This labor shortage has left restaurants scrambling, creating what the report calls “the greatest staffing crisis of any industry.”
Positive Signs and the Road Ahead
Some restaurants are stepping up by raising wages. Nearly 3,000 establishments across states with subminimum wages now offer workers full minimum wages plus tips, proving that fair pay and business success are not mutually exclusive.
The report urges lawmakers to tie future relief funding to wage reforms. Providing aid only to restaurants that pay livable wages would reward responsible employers and push the industry toward fairer labor practices.
As the authors conclude: “If the subminimum wage for tipped workers persists, the restaurant industry is unlikely to recover from its growing labor crisis, regardless of how much money the federal government hands out to business owners.”
Why This Matters
The COVID-19 crisis exposed long-standing inequities in the restaurant sector. While owners were bolstered by billions in aid, the backbone of the industry—the workers—were left scrambling. This divide threatens the viability of the industry itself.
Ensuring workers receive fair pay and access to support isn’t just a matter of justice; it’s essential for the survival and health of an industry that millions depend on for their livelihoods.
