When the Murphy administration said the state would subsidize some $500 hiring bonuses and offer $10,000 to employers for training new workers, some of the state’s largest business groups hailed the program as a major step toward stemming the months-long labor shortages. But some employers are less optimistic.
Sectors such as restaurants, retail and hospitality have been hit particularly hard as they attempt to recover from the COVID-19 pandemic. And many employers had hoped for a wave of job applicants after the weekly $300 in federal unemployment relief expired on Sept. 4. But that has not happened. Moreover, hiring bonuses have had a muted effect on applicant numbers, business owners said.
The pilot program, called Return and Earn, is capped at $10 million for now. “We’re going to see how this works,” Murphy said during a Sept. 29 news conference. “We want to make sure that we don’t overshoot this and think it’s going to have a much bigger impact than it does. I’d rather see proof of concept … before we open this up at a larger level.”
Businesses with up to 100 employees can get 50% of wages covered by the state for an employee’s first six months on the job, provided the employees are paid at least $15 an hour and work at least 32 hours a week.
Economists are split on whether it’s enough to make a difference, while business owners said that it could help at least a bit. But they weren’t expecting much improvement.
“What it does is it gives more incentives to the employee,” said Carl Van Horn, director of the Heldrich Center for Workforce Development at Rutgers University. “A lot of workers are reluctant to return to work for a variety of reasons. Maybe because they don’t think there’s an upward mobility opportunity or maybe they don’t think the employers are paying enough.”
The combination of added cash and paid on-the-job training, and by extension career advancement, could be just enough to turn the tides, he suggested.
But Annelies Goger, an economist with the Brookings Institution, a Washington, D.C. think tank, was more skeptical. “It helps a little bit, probably,” she said in an interview. “There is a certain chunk of people who [think] that’s a good benefit.”
Smaller businesses that don’t have a human resources department and other resources at their disposal would benefit. But the smallest businesses “probably can’t go through the paperwork” for the program.
“People didn’t make decisions purely based on money,” Goger added. “Before [COVID-19] they might have been willing to assume more risk. It wasn’t posing a threat to their life or someone in their family, but now it is.”
While that largely afflicted lower-paying jobs in retail, restaurants, leisure and hospitality, higher-paying, skilled labor in professional services like information technology, legal services and accounting are also experiencing hiring difficulties and resignations, according to Goger. “At a fundamental level, I think the pandemic has changed the labor market,” she said.
Total employment levels in retail, professional and business services, education and health, wholesale trade, manufacturing and leisure and hospitality, for example, fell between March and April 2020, when state economies largely shut down. Those industries have begun reclaiming employees since last May last year, when the early COVID-19 restrictions were loosened.
Dennis Hart, who heads the Chemistry Council of New Jersey, a trade group, lamented that “hiring has been difficult in our manufacturing industry for quite awhile.”
“Our industry pays very well for employees in manufacturing” — nearly $100,000 a year — “especially for workers with a high school or trade school education, but we are still having problems attracting workers, particularly workers needing special skills,” Hart said in an email.
Funding “community college programs leading to jobs in manufacturing and the trades” is worthwhile, he said. And the industry, in conjunction with high schools, must work together to make students aware of careers available in manufacturing.
But he said that many employers are simply too large to qualify for the bonuses, a problem experienced by many other employers NJBIZ contacted.
Mary Ellen Peppard of the New Jersey Food Council, a trade group for the state’s grocery retailers, said the program would be a “good step towards reducing the labor shortage.”
“However, the majority of NJFC members will not be able to utilize this program because they have more than 100 employees,” Peppard, vice president of government affairs for the group, said in an email.
Likewise, the nine casinos in Atlantic City would “not directly benefit and could potentially end up competing with small businesses attracting workers through the program’s benefits,” said Jane Bokunewicz, head of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism, which analyzes the state’s casinos industry.
She noted that many of the casinos have been “creative in their attempts to attract employees over the summer and will continue to be in the months to come.”
Joe Lupo, the president of Hard Rock Atlantic City, said in a September interview that he had seen some success through hiring bonuses, but that with the delta variant workers have been skittish about returning to the casino, hospitality and tourism sectors. He pointed to statistics from the New Jersey Division of Gaming Enforcement that showed lagging employment numbers that have had yet to exceed pre-COVID levels.
Similarly, many restaurant owners said they would not qualify for the state program. Kirk Ruoff, founder and chief executive officer of Turning Point Restaurants, which owns and operates 12 eateries in New Jersey and eight more across Delaware and Pennsylvania, said he was still waiting on whether the rule is 100 employees for the entire company, or per location.
The New Jersey Department of Labor and Workforce Development is still hashing out such issues, and “the devil is in the details,” Ruoff said.
Jeremy Lees, the owner of Flounder Brewing Co. in Hillsborough, said his business would not qualify since he is just looking for part-time workers, which he said is also difficult.
Other businesses that would qualify are unsure about its efficacy. “A lot of these programs are really going to benefit a lot of these big box suppliers more so than any small business,” said Michal Miskovich, who owns Flynn’s Pub House in Rahway. “It’s just extra paperwork.”
In addition, with larger companies offering $20 an hour, “it’s hard to compete.”
“I don’t know how much that’s going to help the restaurant industry, where most employees are just not coming back,” said Moshe Atzbi, who owns Haileys Harp & Pub in Metuchen.
Like Miskovich, Atzbi finds himself competing against larger companies with greater resources. One of his servers will be working two days a week at Amazon “because they’re doing sign-up bonuses.”
“The larger corporations are going to be able to take advantage of the hourly employees,” he said.
Lilia Rios, founding director of Grupo La Providencia, which distributes ethnic Latino food and kitchenware to grocery stores nationwide, said she thought the program would in the short-term help get workers in the door. But “as for retaining employees, I don’t think it’s going to help,” she said.
Murphy admitted that there would be some inequities and imbalances. A worker leaving a restaurant for greener pastures means that the restaurant is still at the losing end of the labor shortage.
“That dishwasher who … leaves their job without having that next job but with a confidence that the market will bear a higher wage and maybe a higher skill, higher value-added skill to that job. That creates a shortage,” he said during a Sept. 29 COVID-19 press conference. “I believe this works its way out over time.”
Some of the state’s largest business groups are also optimistic. In a statement from Murphy’s office, Michele Siekerka, CEO of the New Jersey Business & Industry Association, called the Return and Earn program a “good start” for addressing labor shortages as the state and its private sector work “toward continued holistic approaches to further address the future of work in New Jersey.”
Tom Bracken, CEO of the New Jersey Chamber of Commerce, agreed, saying it was an appropriate use of federal pandemic relief funds. “[A]dditional investment of American Rescue Plan dollars in business-focused programs like these will generate a more robust and sustainable economic recovery in New Jersey,” he said.