Business

Worker shortage threatening to derail US economic recovery: experts

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Small and big businesses alike are struggling to hire workers nationwide — and experts say the problem is putting a damper on the US economy’s recovery.

Starting next week, workers at more than 600 Sheetz convenience stores stretching from Pennsylvania to North Carolina will be earning as much as $18.50 an hour — $4 an hour more than they had been making at the start of the year.

Nevertheless, like thousands of other companies — from Chipotle and McDonald’s to small-time contractors scrambling to meet booming construction demand — Sheetz is not entirely certain that its $50 million in planned pay hikes will be enough to convince workers to apply for jobs.

“We are definitely behind this year in our hiring,” said Sheetz owner and president Ed Sheetz, who is scrambling to hire 2,000 more workers for the summer travel season. “Business is good and it’s going to get better in the summer. We see those two things colliding.”

The problem is threatening to put a lid on the nation’s nascent recovery from the pandemic-induced recession, as workers continue to opt for generous COVID-19 unemployment benefits — including the $300 weekly handout from the federal government — amid lingering concerns including health and safety, adequate hours and access to childcare, experts warn.

Chipotle is one of a number of employers hiking wages in an attempt to lure needed workers.
Chipotle is one of a number of employers hiking wages in an attempt to lure needed workers.
AFP via Getty Images

“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” said Bill Dunkelberg, chief economist for the National Federation of Independent Business. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth.”

The US Labor Department said this week that job openings in March swelled to a record 8.1 million — the highest number recorded since the feds began compiling the data more than 20 years ago — even as the ranks of unemployed neared 10 million people. The NFIB, meanwhile, found that 44 percent of small businesses say they have job openings that they can’t fill. That’s the highest level ever, and double the historic average of 22 percent.

Most openings are at restaurants, retailers and travel related companies, according to government data. The largest increases in job vacancies at the end of March were in accommodations and food services — which grew by 185,000 new openings followed by 155,000 new openings in state and local public education and 81,000 new openings in the arts, entertainment and recreation.

With such disparities, the US job market isn’t likely to return to full employment — meaning an unemployment rate of 3.5 percent — until early 2023, according to Mark Zandi, chief economist at Moody’s Analytics. In the meantime, businesses looking to attract employees in the coming months could be forced to shell out even higher hourly pay rates, he predicts.

Construction businesses are among those finding it especially hard to fill openings.
Construction businesses are among those finding it especially hard to fill openings.
Getty Images

“You could see wages accelerate further because businesses are opening,” Zandi said. “The parents who are at home with their kids may be at home until September.”

At 6.1 percent last month, the unemployment rate has shrunk dramatically since its 14.7 percent peak in April 2020. Nevertheless, pushing it down further has become a stubborn obstacle for businesses like restaurants and hotels which have struggled to hire enough people to keep up with rising demand as COVID-19 restrictions ease.

In big cities like New York, the $15 minimum wage effectively has been nudged up to $18 per hour. That’s the average in Brooklyn, where food-related businesses and childcare services are desperately short-handed, according to Ruel Minott, recruitment and training manager of the Brooklyn Chamber of Commerce.

One challenge Big Apple restaurants are facing is that a large segment of their labor pool — Broadway actors — has temporarily left the city until Broadway reopens in the fall. Minott said one eatery in Brooklyn just landed a baker only after offering a $30 hourly wage — $10 more than what it had been paying previously.

“I was surprised that only two people replied to the ad,” Minott told The Post.

A sign at a Sheetz location provides information about applying for openings at the convenience store chain.
A sign at a Sheetz location provides information about applying for openings at the convenience store chain.
SOPA Images/LightRocket via Getty Images

Despite increased pressure to hire workers, many employers have sought to avoid permanent wage increases by instead offering one-time perks such as referral and signing bonuses. After the 2009 recession, it took nine years for wages to rise, notes Andrew Challenger of Challenger, Gray and Christmas, a Chicago-based executive-placement firm.

“We have not seen a rise in wages yet, despite the fact that employers are finding it hard to get employees,” Challenger said.

Some states are not waiting until September to see whether employees are ready to come back to work. Republican governors of at least nine states including Arkansas, Montana and South Carolina recently said they would prematurely end the additional benefits for their constituents to help struggling employers in their states.

In the meantime the Sheetz chain, which says it is permanently boosting its hourly wages, also notes that one dollar of the $4 increase will disappear by Sept. 23, when the $300 in federal unemployment benefits ends.

“We need to get people in place now before the summer starts,” Sheetz said, referring to the extra buck as a “summer stimulus” wage

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Janice Hill

Janice is a Co-Founder of NetDebaito Official & a family member of Brit Media 360. Our News HUB aiming to bring relevant and unaltered news to the general public with a specific viewpoint for each story catered. Every project is a proficient journalisms' who holds a reputable portfolio with proficiency in content analysis and research.

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