The “help wanted” signs seem to hang ubiquitously in storefronts, and job websites, newspapers and billboards feature opportunities to lure people back to work after COVID-19’s financial devastation.
Heading into a summer season that is crucial to New Jersey’s economy, the early stages of the pandemic recovery have produced a puzzling — and politically divisive — scenario.
There are plenty of jobs available but not enough people filling them.
Job openings reached their highest level nationally in February, the U.S. Department of Labor said. But hiring has been choppy, as evidenced in last week’s job report: 266,000 jobs were added last month, down from 770,000 in March.
A record 44% of business owners in April reported job openings they could not fill, according to the latest report by NFIB, the small-business advocacy group.
The imbalance threatens to dampen profits for business owners who had hoped to rebound this year after a brutal 2020 due to the widespread lockdown orders. It could also mean higher prices for something as simple as a hamburger, fewer available rooms at hotels and delays in manufacturing and construction, business owners said.
In the meantime, political arguments have come to define what’s driving the labor shortage.
Many conservatives blame unemployment benefits of an extra $300 a week, saying they have gone from being a lifeline during lockdown to a cushion incentivizing people to stay at home. Democrats like Gov. Phil Murphy argue that it is a temporary glitch that will work itself out as the economy recovers with the aid of eased restrictions and greater vaccinations.
A confluence of factors has created “a perfect storm right now,” as New Jersey Business & Industry Association President Michele Siekerka put it.
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Why there is a lack of workers
While she and other business leaders agree that a lack of child care options, stalled federal visas for overseas employees and general hesitancy among people to reenter the workforce contribute to the shortage, there is a dispute about whether unemployment benefits are keeping people home instead of working.
Murphy last week called the worker shortage “a passing reality,” but employers are nonetheless raising alarms that they may not recover this year if they can’t find the help they need.
“I’ve got ads in every paper. I’m on the radio. I’m giving bonuses,” said John Costa, owner of Cluck’n Crabs in Stafford. “I’m in panic mode right now.”
Costa’s takeout and delivery business typically has about 30 full- and part-time employees on the payroll by now, but as of last week he had “below 20 going into, literally, the busiest time of the year.”
Like many other employers, Costa said he has heard directly from job prospects that they are better off collecting unemployment, enriched with an additional $300 weekly from the federal government, than working.
Those employers also say they’re offering more than the current $12 minimum wage to entice people back to work.
“We have never had where people want to stay on unemployment and not go back to work because they make more money,” said Bob Pfluger, president and co-owner of VEP Manufacturing in Jackson. “It’s a disaster.”
In the Ocean County area, where summer tourism is an economic engine, Costa said: “It truly is a wage war out there.”
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Searching for staff in NJ
There may be many anecdotes of people collecting unemployment instead of working, but economists dispute that it’s the cause of the shortage.
President Joe Biden said earlier this week that “we don’t see much evidence of that.”
The Federal Reserve Bank of Chicago said in a letter last year that people who collect unemployment benefits “search more intensely than either the employed or those out of the labor force.”
In another letter published last month, the reserve said the economic devastation the pandemic had on the leisure and hospitality industries has caused an elevated unemployment rate in those sectors.
Take leisure and hospitality out of the overall job market equation, the reserve said, and “there is relatively little decline in the correlation” between unemployment and job vacancies.
Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University, said the economy is beginning to move in a positive direction after a drastic decline last year but employers in certain sectors are now unable to find the skilled workers they need.
But that could be for a range of reasons, he said. For example, a former server who worked for a low minimum wage and tips may have found a job paying as well delivering for DoorDash.
Others may be worried about contracting the virus or caring for loved ones who have gotten sick. Then there are parents whose children may not be back in school full time and who are unable to find child care.
“That’s what happens in a complex labor market. It’s not because of unemployment insurance,” Van Horn said.
New Jersey has recovered 384,900 jobs, or 54% of the number lost in March and April 2020 at the start of the pandemic, the state Department of Labor and Workforce Development said last month.
The state’s unemployment rate in March 2021 was 7.7%. A year ago, in March 2020, it was 3.8%.
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What employers are doing to find workers
Employers are casting lines with an array of lures to try filling open jobs.
At Morey’s Pier and Water Parks in Wildwood, the popular summer playland is advertising on billboards but also on Spotify, Google and Facebook, and in other regions of the country and with the Puerto Rico Chamber of Commerce, said Vice President Denise Beckson.
It’s also paying $15 an hour for workers 18 and older, she said.
“We’re doing everything that we can to try to attract as many people as possible,” Beckson said.
But the company is still short about 1,000 workers for the summer season, she said. A significant cause of the shortfalls for Morey’s is a backlog of J-1 visas for overseas workers, she said.
The Trump administration restricted travel into the U.S. last year, and the Biden administration is slowly allowing reentry, but the backlog likely means Morey’s will hire just a fraction of the foreign help it typically does, Beckson said.
“We were looking forward to a recovery year this year, and it’s disappointing we can’t fill the jobs,” she said.
Murphy may view the shortage as a temporary problem, but business leaders such as Eileen Kean, New Jersey NFIB director, worry that it will last much longer.
“I think this is going to be a problem right through Labor Day,” Kean said. “The only glimmer of hope is that there’s college kids who are still looking for job.”
A sustained labor shortage could have ripple effects for the overall economy, since tourism in 2019 generated $46 billion and accounted for 3% of the state’s gross domestic product, according to the Division of Travel and Tourism.
Last year, tourism dropped 27% from 2019 in New Jersey, the agency said last week.
Business owners also warned of delays in product manufacturing, decreased hours and increased prices.
Murphy acknowledged last week that the tactics used by employers to hire workers, such as offering higher wages, will likely be passed on to consumers.
“So the burger is going to be an extra 50 cents or 75 cents, whatever it might be,” he said. “Some amount of inflation feels inevitable.”
Siekerka, of the Business & Industry Association, has pushed for Murphy to lift restrictions on child care centers and reopen the Labor Department’s one-stop centers that help with training and job placement.
Murphy said Wednesday that there were no immediate plans to do so, but his administration is “monitoring” conditions for the opportunity to reopen.
Bhavesh Patel, chairman of the New Jersey Restaurant & Hospitality Association, suggested during a conference call with industry leaders and lawmakers that the state should consider incentives to get people back to work.
Some hotels are paying up to $20 for housekeeping jobs and nearly $25 an hour for front desk positions, “and we still can’t get workers to come in.”
As a result, he said, rooms are “sitting empty” because they have not been cleaned for guests and “we just can’t take the reservations.”
“We need help,” Patel said. “We need help right away.”
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Dustin Racioppi is a reporter in the New Jersey Statehouse. For unlimited access to his work covering New Jersey’s governor and political power structure, please subscribe or activate your digital account today.
Email: [email protected]
Twitter: @dracioppi
