Business owners and executives may have to grapple with a new hiring reality, given that the expiration of supplemental unemployment benefits apparently has not changed the way individuals are looking for work. Businesses in industries such as retail, dining, leisure and hospitality are still facing labor shortages, a phenomenon that could undermine the economic recovery.
“We’re hoping that people just didn’t get used to not working,” said Howie Felixbrod, owner of the Blue Moon Mexican Cafe, a restaurant with two locations in Bergen County. Like many owners, Felixbrod has struggled to fill positions and has increased pay to retain staff who might otherwise move to other restaurants.
The state’s unemployment rate has remained above 7% for much of 2021. Most recently measured at 7.3%, the rate is the fifth highest in the nation. According to the U.S. Bureau of Labor Statistics, New Jersey has recovered nearly 65% of the jobs – 486,600 positions – that were lost during the most intense pandemic-related business closures in March and April last year.
According to AnnElizabeth Konkel, an economist with the Indeed Hiring Lab, the number of jobs that come with incentives such as signing or retention bonuses has more than doubled since last July. Job searches using terms such as “hiring incentives” have jumped 134% since the start of 2021.
But offering bonuses and higher pay has been “to no avail,” said Bob Considine, a spokesperson for the New Jersey Business & Industry Association.
Dana Lancellotti, who heads the New Jersey Restaurant and Hospitality Association, agreed, saying in an email that “we have seen very poor response to incentives,” and that restaurants across the state haven’t seen any “uptick in applications or job fulfillment in our industry since the benefits expired.”
Gov. Phil Murphy opted against continuing an added $300 a week in jobless benefits, saying the price tag would be too high. Roughly 500,000 New Jerseyans were receiving those payments when they expired.
New Jersey had gotten $6.4 billion from the American Rescue Plan, which would have allowed the state to continue the added payments. But Murphy instead is opting to use those funds for other needs.
The $300 per week was initially $600 under the Coronavirus Aid, Relief and Economic Security Act, which then-President Donald Trump signed in March last year as national unemployment hit levels not seen since the Great Depression. But the COVID-19 unemployment benefits went beyond just the $300 a week. Another 250,000 New Jerseyans received benefits under the Pandemic Unemployment Assistance program, which provides aid to non-traditional workers such as freelancers and sole proprietors. And 190,000 people received a 13-week extension under the federal Pandemic Emergency Unemployment Compensation program. Roughly 300,000 New Jerseyans were moved to a state-run extended benefits plan.
“To just let them expire, I think, is going to create tremendous hardship,” said Elise Gould, an economist with the Economic Policy Institute, a left-leaning think tank. She cited the spread of the delta variant, which has raised safety concerns.
Peter Chen, a policy analyst New Jersey Policy Perspective, another think tank, agreed. “Businesses will continue to have trouble finding workers until we have the pandemic under control,” Chen said. “This was true at the onset of the pandemic, and it remains true now with the delta variant.”
And James Hughes, an economist at Rutgers University, warned that the delta variant can, and already has, slowed the state’s economy. Many local economies in cities such as Newark and Jersey City, which boast sizable commercial districts, were counting on return-to-work plans for their economic rebound.
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“The economic ecosystem that surrounded offices in Newark, in Jersey City, the restaurants that service daytime workers and the like … was pummeled by the closing down of a lot of white-collar office facilities,” Hughes said. “That’s a source of a lot of jobs that are still lagging behind.” The job reports for July, which reflected steady gains, are “ancient history right now.”
The same dynamic is playing out elsewhere. Joe Lupo, president of Hard Rock Hotel & Casino Atlantic City, said the delta variant was discouraging job applicants. “You have some organizations going through some changes with COVID, some organizations are really pulling back on their staffing level requirements,” he said in an interview.
In fact, data from the New Jersey Division of Gaming Enforcement, which regulates the state’s nine casinos and three racetracks, shows staffing levels at the gaming venues largely stagnating. In July 2021, there were 22,672 total casino employees, or 2,208 fewer than in July last year when casinos emerged from a three-and-a-half-month shutdown. In February 2020, the last entire month before the pandemic, there were 26,450 employees.
Hard Rock in July managed to edge past February staffing levels according to NJDGE data, with 3,570 employees in February last year and 3,596 workers in July. Like many other venues, the casino offered an array of hiring bonuses for their workers.
Gould said she was skeptical that many companies were actually offering higher pay. She pointed to data from the BLS, which showed average weekly wages haven’t increased.
“Are we seeing any kind of measurable acceleration in wage growth … that employers are having to raise pay or sweeten the deal in some way? Can they steal [workers] from their neighboring companies across the street?” she asked.
“[Y]ou’re not seeing that kind of wage growth,” Gould continued. “I get it that there’s a lot of anecdotal evidence out there.”
In the leisure and hospitality sectors, average hourly wages peaked at $19 an hour just after February 2020, before dropping down to just above $17 an hour in May, then up to $19 an hour again in January of this year, according to BLS data. They now stand at just below $19 an hour as of May.
Wages in education and health services — hospitals, doctors’ offices, colleges and K-12 schools for example — have plateaued, oscillating between $31 and $32 an hour since September last year, after steady increases from $27 an hour at the start of 2018.
Likewise, “other services” — including personal care, repair and maintenance, laundry services, automotive repair, and religious, grantmaking and civic institutions — has remained steady. Average wages hit a high point of $30 an hour in April 2020 and have since stayed in the $27 to $29 an hour range.
Two of the nation’s largest retailers — Walmart and Target — have reported being able to bring back workers with increased pay, bonuses and benefits such as paid time off and health insurance. Both said they did not have numbers available showing what their application and recruitment levels were.
Still, Mary Ellen Peppard of the NJ Food Council, a trade group for the state’s grocery retailers, said many retailers continue to experience labor shortages. “Our members offer incentives and benefits to the extent possible given the rising costs of operations, and while these incentives can be helpful, there are other factors that make attracting employees difficult right now,” Peppard, the council’s assistant vice president for government affairs, said in an email. Those issues range from concerns over the lack of access to childcare and “continuing anxiety about the pandemic.”
Murphy indicated he hopes that the end of the weekly $300 in benefits could still spur rebound in employment levels. “I hope it helps address the labor market, the challenges that we had,” he said during a remotely held COVID-19 press briefing on Sept. 15. “I personally think it would have perhaps a modest impact on that.”
And indeed, Felixbrod said he has seen some increase in the level of applicants. “Where we used to get one or two applicants, we’re now getting four or five,” he said. “It’s still hard finding the right people.”
Assessments of how the lapse in the $300 supplement and the addition of hiring bonuses and increased pay affect employment levels might not be available for several weeks. The first test would be when the September job numbers come out in mid-October.
Hughes cautioned that connecting higher numbers to the loss in weekly unemployment bonuses or hiring incentives, would be next to impossible. “They all have some impact, but we can’t really get an accurate gauge [of] ‘30% is due to this, 20% is due to this’,” he said.
The dynamic playing out across the nation — both anecdotally and according to jobs data — is that workers are voluntarily leaving their places of employment en masse. Essentially, workers are calling the shots, Chen suggested.
“It’s rare for low-paid workers to have this much bargaining power,” he wrote in an email. “For the first time in decades, these workers finally have some leverage to negotiate higher pay, better benefits, and more work-life balance.”