Utah liquor stores have an 86% employee turnover rate — and the low pay is hurting business

(Francisco Kjolseth | The Salt Lake Tribune) Kathleen Jacobson, regional manager for the DABC helps bring Utah's newest liquor store in Herriman online, Friday, Aug. 30, 2019.

Employees at Utah’s state-run liquor stores — who for decades have been paid strikingly low wages — are now leaving at an alarming rate.

The departures are affecting customer service, efficiency and the bottom line, agency officials warned legislators this week.

Employee turnover now averages 86% at the 47 liquor stores operated by the Utah Department of Alcoholic Beverage Control.

The worker drain has cost the agency at least $1.2 million in recruiting and training time, as well as in overtime pay to cover staff shortages, DABC Executive Director Sal Petilos told members of the Legislature’s Business and Labor Interim Committee on Monday.

High turnover also impacts customer service and product knowledge, which is more difficult to calculate in real dollars but affects the agency nonetheless.

The past fiscal year, the DABC had more than 550 store employees, from retail clerks to store managers. Of those, 237 were full time and 317 were part time.

Starting pay for a full-time clerk is $11.32 an hour, while part-timers get $9.94. Assistant store managers begin at $13.53 an hour; and store managers earn $17.10

Not surprisingly, because of Utah’s strong pre-coronavirus economy, the part-time employee turnover rate is a whopping 133%, the DABC reports. Full-time employee turnover is far less but still a troublesome 41%.

For years, the DABC has asked the Legislature for additional funding to boost salaries, Petilos told the committee, “but we have not received the amount of funding needed to address those issues."

To that end, Petilos asked lawmakers to examine changing the way the DABC is currently funded — giving the agency a percentage of gross revenues.

The committee agreed to study the issue before the start of the 2021 legislative session.

While the DABC generates millions for the state, it does not keep any of the profits. Under state law, all net proceeds are given to the state, and the Legislature decides how the dollars are divvied.

In fiscal 2018-19, the DABC contributed $191 million to state coffers. Most of it, some $118 million, went into the general fund to be used however lawmakers saw fit. The rest was divided among other programs, including school lunch, underage-drinking prevention and liquor law enforcement.

The DABC, in turn, must request money from the Legislature just like any other state agency.

Lawmakers from both political parties recognized the need for a funding change but were divided on how it should be done.

“We need to make this happen,” said Sen. Karen Mayne, D-West Valley City, who for years has advocated for liquor store improvements. “You will keep losing people if you are not paying them well.”

Rep. Timothy Hawkes, R-Centerville, who sponsors most alcohol policy changes, wants to weigh other possibilities.

“I’m not sure that a percent of revenue is a solution. It creates a profit motive for the DABC,” he said. “But we do need to allow the DABC greater flexibility to serve the public.”