After 43 years in the food business, Mike Connors is back to bussing tables. And not by choice.
Staffing shortages have forced the veteran Traverse City restauranteur from behind the owner’s desk and onto the dining floor of the West End Tavern he owns and operates with his wife, Sheila.
“We were down to the bare bones for a while there,” said Connors. “I’ve owned a lot of restaurants, and this is the most desperate situation I can recall.”
With an unprecedented number of positions to fill, business owners are scrambling for new hires and looking for ways to appease workers who already are on the payroll, from higher pay to more lenient time off.
In April, job openings nationwide reached a high of 9.3 million, the highest recorded since the federal Bureau of Labor Statistics began keeping track in December 2000. In the same month, 4 million workers, or 2.7 percent of the workforce, quit their jobs, another record.
Market observers say some short-term factors contributing to employee scarcity are expected to ease by this fall, but that COVID-related disruptions likely have exacerbated long-term shifts in work-life balance to which employers will have to adapt.
“It’s a labor market like we’ve never seen before,” said Beth Kelly, founder and CEO of HR Collaborative, a recruiting and human resources consulting firm in Grand Rapids. “There’s barely a company that doesn’t have a ‘Help Wanted’ sign out there.”
Workforce participation by individuals aged 16 and up dipped to 60.2 percent in April 2020, the lowest since the early 1970s, according to economists at the Federal Reserve Bank of St. Louis. Since then, it has rebounded slightly to 61.6 percent as of May.
“But for various reasons, some people are choosing not to return to the workforce,” said Kelly. Many executives point to the $300-per-week federal top-up of unemployment benefits, which expires in September, as disincentive to work.
“If you’re in a $15-an-hour job, until September 6 you’ll make $24 a week more by being on unemployment,” Kelly calculated. “That’s a short-term issue. The other issue is that we shut down a lot of the infrastructure that allows women to work, like schools and day care.”
Should schools reopen and vaccination rates pick up, the impact of those factors may wane.
“We’ve all managed to survive 16 months and it’s a beautiful summer, so people are saying ‘why not enjoy it?’” Kelly said. “I truly believe this will adjust itself in fall.”
But generational shifts in the relationship between employee and employer may remain, prompting business owners and CEOs to re-evaluate management approaches to the workforce.
Poachers in the parking lot
For now, retailers and hospitality businesses – whose associates were among the first layoff casualties in 2020 — appear to be suffering the most.
Cedar Fair, the operator of landmark theme parks nationwide, including Sandusky, Ohio’s 150-year-old Cedar Point, had to temporarily curb hours at its parks just as its crucial summer season began, because of worker shortages.
“While we’ve had to deal with tight labor markets in the past, this is by far the most challenging labor environment I’ve seen in my more than 30 years in this business,” said Cedar Fair CEO Robert Zimmerman during a May earnings call with investors.
Later in May, Cedar Point announced on Facebook that it was boosting pay for all positions to $20 an hour – what it called a 100-percent increase over 2020 – and offering $500 signing bonuses and free friends-and-family passes to associates.
Elsewhere, Pigeon Forge, Tenn.-based Dollywood Parks began offering childcare subsidies to its workers. The Six Flags amusement park chain is offering retention bonuses and, according to the Albany Times-Union, has dropped longtime grooming requirements that prohibited its staff from displaying tattoos, piercings and certain hair styles.
Connors of Traverse City said he had to shut down lunchtime service due to lack of dining room staff, and for a time — unable to muster the roughly 30 servers, bartenders, dishwashers and cooks needed for an evening dinner service — opened only five nights a week.
He’s boosted wages by about a dollar an hour for most staff and is back to opening at 3 p.m. seven days a week – often with the boss doing prep work in the kitchen or clearing tables of used plates and glasses.
Customers have been understanding about the resulting price hikes on menu items – a popular halibut entrée with rice pilaf has gone up about $1.50, for example — but Connors said each day is fraught with worry about no-shows and other glitches.
“There’s a finite pool of qualified restaurant workers in the region,” said Connors. “We’re all basically playing musical chairs with the cooks and bartenders and wait staff who already are in the area. I’ve had people in my parking lot trying to solicit our servers to work at other restaurants.”
Service providers like landscape companies also admit to shortages, with some boosting wages and offering bonuses – but were reluctant to speak out for fear of turning off potential customers.
Manufacturers are suffering, too.
LCI Industries of Elkhart, Indiana – which bills itself as the largest parts supplier to the recreational vehicle industry – is losing workers to more lucrative jobs.
“The RV makers have the highest wages in our region – as high as $50 an hour,” LCI CEO Jason Lippert told the Reuters news service. “So, generally, workers will look to jump from $20-an-hour jobs if they are not happy where they are at.”
In Elkhart County, some 1,000 manufacturing firms range from small suppliers to Fortune 100 companies like auto suppliers Tenneco and iconic recreational vehicle makers Thor and Forest River.
“We import 35,000 workers into this county every day, and we’re seeing the footprint from which they are drawn widen out a lot,” said Chris Stager, CEO of the Economic Development Corporation of Elkhart County.
Pandemic-driven demand for RVs and travel trailers, which is driving a robust increase in sales, has exacerbated the labor issue. Stager, however, takes the longer view.
“What we’re seeing is that the bulk of those who haven’t returned to work are those who have chosen to retire,” he said. “It’s a surprise that it’s hit with the force it has, but this was not entirely unexpected.
“Competition for labor has forced all businesses to be mindful of what it takes to retain employees – from pay and benefits to amenities and work rules,” he said. “In many cases it comes down to the company culture.”
Connors concurred, noting that he’s had to accommodate workers who want more time off or other work-life concessions, a sharp turnaround from the days when eager employees were angling for increased hours.
Stager said that Elkhart County officials and employers looking at opportunities for public/private affordable housing initiatives, and other means to attract workers to the region.
Kelly agrees that the employer-employee relationship is evolving rapidly.
“There is a mind shift in the way we think about employees,” she said. “They are an asset that appreciates over time. We need to treat them as we treat customers.”
Talk with your workers and seek their input, she advises.
“We’re building this plane as it’s flying,” Kelly said. “There are bound to be fits and starts.”