Benefits supersized as entry-level jobs vie for workers

Business & Technology: Saturday, August 04, 2001

By Sheryll Poe
Seattle Times business reporter

Pat Hitchcock has been rustling French fries for three years at Dick's Drive-In Restaurant in Lake City.

The job is not glamorous. The golden oil is hot. The bags of pale potatoes are heavy. And while it may not be flipping burgers, you can see the grill from the fryer.

But, for Hitchcock, who is taking a break from college, going to work at this Seattle institution was a no-brainer.

"I picked this place for the benefits and the money," said Hitchcock, 21, as he hefted bags of potatoes onto a dolly.

While most entry-level restaurant workers, including area McDonald's, make $6.75 an hour, employees at Dick's receive $8.25 an hour. The company also has a 401(k) savings plan, paid vacations for full- and part-time employees, paid time off for up to four hours a month for community service and paid health insurance for employees who work at least 24 hours a week.

Since 1994, Dick's also has offered employees scholarships worth up to $10,000 over four years.

Despite an otherwise gloomy economic climate and widespread layoffs at Internet companies, fast-food restaurants are doing booming business and looking for hard workers. To be competitive, jobs that don't require much skill or a college degree are coming with previously unheard-of benefits and competitive wages.

"It's an expensive proposition," said Ken Frazier, general manager for Dick's, which has five restaurants in Seattle. "From a business point of view, we'd love to pay minimum wage and get great employees, but it doesn't work that way."

Dick's employees are typically between 16 and 28. Frazier estimates 10 of their 95 employees are participating in the scholarship program and expects that number to jump to 30 or 50 late this month before school starts. This year, any 2001 high-school graduate who took a job at Dick's before June 30 became eligible for the scholarships.

"We've had people leave for a lower-paying job just because of the fast-food stigma," said Frazier, who's been with the company for 21 years. "Fast food doesn't have a great image, honestly."

Eileen Siscovick of William M. Mercer, a compensation and benefits consulting firm, thinks the benefits package is a sound business practice.

She notes that a small company can spend 1.5 percent of what it pays for salaries on hiring and retraining. For companies paying a yearly wage of less than $20,000, that amounts to a cost of $9,000 for every 30 employees lost.

"I have seen unbelievable numbers for yearly turnover — as high as 15 to 20 percent," she said. "It's less expensive to offer a competitive package than training people over and over again."

The training, of course, comes after someone is hired.

The nation's unemployment rate in July was unchanged at 4.5 percent, according to numbers released yesterday by the federal government. The rate has held steady at 4.4 percent or 4.5 percent since April.

Washington's unemployment rate recently rate hit 5.7 percent in June, up from 5.4 percent in May.

Although by all accounts it's not like the high-rolling late 1990s, restaurants have continued to fare well.

"From an economist's point of view, an unemployment rate in the low 4's isn't worrying," said Roberta Pauer, Seattle economist with the Employment Security Department. "It's still higher than the low 3 percent rate we were seeing from 1997 till 2000."

Employment in the eating and drinking sector in King, Snohomish and Island counties rose 1.7 percent from April to May and 5 percent from May 2000 to May 2001. Over the year, from May to May, 7,100 jobs have been added in the eating and drinking sector. In contrast, manufacturing jobs fell 3 percent year to year, with overall goods production falling 2 percent. Pauer said that places like Dick's are willing to pay more to get people who show up on time, are reliable and can serve customers with courtesy and attention.

"Even for counter jobs — which tend to be filled by younger people who are unskilled by virtue of their youth... employers want good people," she said.

Dick's would not disclose what they spend on employee benefits.

"I don't think you could start a business today and offer what we offer," Frazier said. "You have to already have a level of success to offer all that."

It's certainly a formula that works for Hitchcock, who is working at Dick's full time.

"I'm kinda spoiled now," he said with a grin. "Whenever I go to someplace else, I think they're so slow. I'm like, `Come on guys, it's not that hard.' "

Sheryll Poe can be reached at 206-464-2718 or at spoe@seattletimes.com.

Copyright © 2001 The Seattle Times Company

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