As South Peninsula downtowns feel labor shortage, businesses ponder solutions

MENLO PARK, Calif. — The Tuesday night dinner shift is marked by a lull in business, with the few customers who choose to dine spending less than they would on weekends. But for Menlo Park restaurants, finding the staff to operate their businesses on even the slowest days can be a challenge. 

Of 16 downtown Menlo Park businesses– three retail businesses and 13 restaurants– that responded to a survey conducted on a Tuesday in late October, 13 indicated that they were currently hiring. Nine of the businesses said that it had been difficult to hire employees in the past year, while 12 indicated that they had problems with staff turnover.

The shortage comes at a time when national employment of service workers has plummeted from pre-pandemic levels. About 10 million people worked in the service industry in 2022– four million fewer than in 2019, according to the Bureau of Labor Statistics. In October 2023, there were 1.4 million job openings in the industry nationwide. 

The businesses surveyed in Menlo Park accounted for 21 of those vacancies.

A map with points representing businesses who responded to the survey. Click on a point to see more information. (Xavier Martinez/Peninsula Press)

At The Mandarin restaurant on El Camino, manager James Lin described a constant search for dependable employees. Months ago, applicants responded to the restaurant's advertisements online and in local newspapers, only to quickly leave for other jobs. Nowadays, those ads go unanswered. Lin and his staff have resorted to working extra hours and– in desperate times– asking personal friends to fill shifts.

Turnover has long been common in the service industry, said Danny Browning, manager of La Stanza Cucina Italiana on Oak Grove Avenue. Nationally, about 5% of restaurant employees and 3.5% of retail workers quit their jobs in September 2023 – both significantly higher than the overall average of 2.3%.

Browning said La Stanza is almost always looking for about two new hires, as employees often leave in search of better hours or pay. 

While the South Peninsula's labor shortage is reflective of national and statewide trends, it is complicated by the area's high cost of living. Darvin Aragon, general manager at Left Bank on Santa Cruz Avenue, cited the high cost of living as a cause of staffing issues. Aragon has noticed that many of Left Bank's employees cannot commit to working a lunchtime shift due to their long commute.

Menlo Park's median home sale price in September 2023 was over $2 million, and median rent for a one bedroom apartment $2,600 – neither affordable for a person working an hourly service or retail job.

Employees instead tend to rent apartments in more affordable parts of the Bay Area, according to Stephen Levy, the director and senior economist of the Center for Continuing Study of the California Economy. This means that they must commute long distances, sometimes upwards of two hours. Consequently, the employees are not available to work as many hours. 

Some workers have left the industry altogether. Vasile Oros, owner of Menlo Hardware, noticed some of his former employees went to work in the gig economy, driving for Uber or delivering food on Doordash, where they could set their own hours and earn a similar wage. 

Oros said that, before the pandemic, his store attracted enough applicants for him to conduct multiple interviews.

"Now, people don't even apply," Oros said.

Levy agreed that wages were a factor driving the shortage. "By the time businesses account for the incredibly long commute time and gas costs, the wages have to be quite a bit higher to [incentivize] people to work," he said. 

The average hourly earnings (cash plus tips) for California's food service industry increased from about $19 in 2019 to $25 in 2022 – still dwarfed by the $37 average across all industries in the state.

Other business owners say that their industries never bounced back from the pandemic.

Dennis Lim, owner of Shiok Singapore Kitchen, remembered reopening his business only to learn that many of his former employees had moved on to other industries. This coincided with a dropoff in midweek catering for local in-office events, likely from the increase in work-from-home employment.

"People aren't coming to work, so they aren't coming to eat," Lim said. 

This demand decrease has lowered the amount of money his employees can make on any given day. As a result, fewer people have applied for jobs at Shiok – even undocumented workers, who Lim remembers would frequently seek employment before the pandemic.

In response, Lim decided to reduce the restaurant's operating hours, hoping the reduced shift lengths would lead to more applicants. Shiok was hiring for three positions as of late October. 

As problems persist, businesses grasp for solutions

When the career waiters who used to dependably fill shifts throughout the week began to leave Left Bank, Aragon found no choice but to look for other sources of labor. He struck gold with local high school and college students, who were looking for a job to build their resume or pay tuition. 

Students have rigid schedules, though, and are often in class during the lunchtime hours where labor is most needed. Younger employees may also require more training and supervision.

Some businesses have raised wages to try to attract dependable employees. Levy, a Palo Alto resident himself, gave the example of the local Whole Foods, which raised wages for workers in its cafeteria this fall. Fast food workers statewide will see an increase in minimum wage to $20 per hour in 2024. 

To afford those wage increases, businesses are raising prices. Levy said sales tax revenue in Palo Alto, which mostly comes from restaurants, has increased since 2020, indicating that sales are up for restaurants and businesses. 

Whether the increase in sales offsets hikes in wage and the costs to find, train, and retain employees, Levy said, is another question. The price increases could also result in lower demand from customers. 

A number of affordable housing projects are under construction in the South Peninsula, with more still in the planning phase. Some of these units are reserved for specific occupations like teachers, who are also in short supply. Funding concerns have further limited the availability of affordable housing, despite state mandates and broad political support, according to Levy.

"[Current housing plans] are not enough," Levy said. "It's never enough, because the costs are just going really out the roof."

In October, Santa Clara County added 920 total housing units to the market. Florida's Broward County, the county closest in population, added 3,446 units. 

Despite challenges, Levy said that businesses have generally stayed afloat. Few have shut their doors for good. But, as shortages continue and solutions stall, the line between turning a profit and going out of business is becoming razor thin.

"You have to be able to adapt. You do whatever you can, knowing that some [businesses] will stay," Oros said as he helped his wife restock items at their hardware store.


  • Xavier Martinez

    Xavier graduated from Stanford in 2023 with a degree in economics. As an undergraduate, he wrote about the high phone call costs faced by U.S. inmates, temporary Mexican workers’ interactions with the labor market and the efficacy of government healthcare assistance programs. A lifelong lover of charts and maps, he's excited to combine data journalism with narrative-style reporting during his time in the MA program. In his free time, Xavier enjoys taking road trips through the American West, eating apples and bartending.

Scroll to Top