Trouble ahead?

Gov. Phil Murphy’s announcement on May 3 that he was taking the “most aggressive steps” on reopening so far in the pandemic generated considerable excitement among business owners. But some groups question whether employers will be able to scale up to meet demand once the restrictions are eased. For example, the labor shortage plaguing the restaurant and hospitality industries are particularly worrisome for business owners as they prepare for increased indoor capacity. And public health experts worry that the state might be jumping the gun with its reopening.

“We’re getting closer to starting to reopen and I think that we do need to start to respond to the fact that people are getting vaccinated and we are moving in the right direction,” said Stephanie Silvera, who chairs the public health department at Montclair State University. “My only concern is running the victory lap before the race is done.”

The reopenings will happen in two phases: the first was scheduled for May 7 and the second will take place on May 19. Outdoor gathering limits increase from 250 to 500 people, and then will be switched to a 6-foot social distancing and mask requirement. Capacity at restaurants and other indoor businesses – gyms, retail, recreational outlets and others – will no longer based on a percentage of maximum occupancy. Instead, they’ll be bound by the 6-foot social distancing requirement, which could be lowered if the federal Centers for Disease Control changes its guidance. Barside seating and self-service buffets can resume, but patrons have to sit at their tables when they consume food or drink.

Tables can be placed closer than 6 feet if they are separated by type of barrier. Large outdoor venues, those with at least 1,000 seats, can increase their capacity from 30% to 50%, and indoor venues will be able to go from 20% to 30%. Indoor catered events such as proms and weddings are capped at the lesser of 50% or 250 people. Private indoor gatherings will be capped at 50 people, up from the 25-person limit.

Several of the moves were originally scheduled for May 10. “We feel confident in moving up this timetable by three days given the accelerated progress we are seeing in our vaccination program and hospital metrics, and lower daily case counts,” Murphy said.

The governor said future reopenings may be forthcoming should the numbers head in a right direction – the spread slows down and vaccinations go up – and “so long as we don’t see a backslide in our metrics.”

According to CDC projections from early May, the spread of the pandemic could subside substantially by July if people continue to get vaccinated, wear face coverings and practice social distancing. But caution is still warranted because several highly contagious variants are going around.

The governor projected that the restaurant restrictions would be the toughest to enforce. “[A]ll impacted restaurant, tavern and bar owners should be prepared to ensure proper social distancing between patrons at their bars – either 6 feet distancing between groups seated at the bar or physical partitions,” Murphy said. “We are counting on restaurants and bar owners to enforce this guidance and prevent congregating at the bar, as we have warned all along that those situations present a high danger of allowing the virus to spread.”

The focus on proprietors is a concern for public health experts. “Business establishments and restaurants will be tasked with self-enforcing these requirements. Although challenging, this is essential to prevent community transmission, especially as variants are circulating,” said Corey Hannah Basch, a professor and chair of the public health department at William Paterson University.

She noted that restaurants with smaller square footage would need to employ “innovation and oversight” to flourish and stay open with these new restrictions in place. “[M]aintaining protective behaviors and keeping the pace with vaccinations is essential to avoid hindering the progress that has been made,” she wrote in an email.

Sylvia Twersky, a public health professor at The College of New Jersey, said the current level of New Jersey adults vaccinated made the new reopenings risky. “Increasing gatherings in communities with low vaccination puts everyone at risk,” she wrote in an email. “However, the new guidelines are perfectly reasonable for fully vaccinated individuals.”

The Murphy administration’s “Operation Jersey Summer” aims to fully vaccinate 4.7 million adults by June 30. With nearly 3.5 million adults fully vaccinated as of early May, interest in getting a shot has languished, jeopardizing the state’s ability to reach its goals. The plan calls for incentives like free beer, as well as marketing and social media campaigns, broader availability of walk-in appointments and direct outreach to urban communities with lower vaccination rates, as well as college campuses.

“It absolutely is a risk for unvaccinated individuals to be part of larger gatherings in communities with low vaccination rates, especially indoors in an environment like a restaurant where people are staying for longer periods of time with masks off,” she continued. “We’re nowhere near a ‘herd immunity’ rate of vaccination … That is not to say that we will never be able to get back to normal, or at least a new normal, as long as most higher-risk individuals are vaccinated and that everyone who wants to be vaccinated has access to the vaccine.”

Political considerations

Murphy’s moves come more than a year into the pandemic and there are signs that residents are weary of the restrictions. A May 6 poll from Monmouth University found that 73% of New Jersey adults approved of Murphy’s outdoor reopening measures, compared to 24% who said the move was a bad idea, while 60% approved of indoor reopenings and 37% who disapproved. “Most New Jerseyans are ready to see the state reopen. The problem is, we still have a number of residents who are hesitant or downright opposed to getting the vaccine,” said Patrick Murray, who heads the Monmouth University Polling Institute, which interviewed 706 New Jersey adults between April 29 and May 4.

New Jersey’s reopenings were announced in coordination with New York and Connecticut. Millions of the state’s 9.4 million residents live within an hour of New York state or New York City. “This is a major reopening of economic and social activity,” New York Gov. Andrew Cuomo said on May 3, adding that the three state’s reopenings need to “complement one another” rather than “encumber one another.”

Murphy has denied that his moves came in response to Cuomo and Connecticut Gov. Ned Lamont’s decisions. “Zero. No pressure. Why all of the sudden would we start buckling under pressure giving all the crap that’s been coming at us over the past 14 months,” the governor said. But Murphy acknowledged that a regional approach “made sense.”

Twersky contended that the alternative for Murphy, to keep New Jersey businesses restricted while New York and Connecticut loosened their mandates, would simply not be an option. “Public health is politics, and I do suspect that there has been pressure,” she told NJBIZ. “I think there’s a pressure on the governor to reopen, particularly as Connecticut and New York state” follow that route.

One senior administration official agreed: New Jersey businesses would lose out if they did not scale back restrictions. “As it relates to our large venues” for example, “if you can have a wedding in Bergen County restricted up to 100 people but you can go to Westchester and have 300 people, that’s impactful for New Jersey businesses,” said this official, who requested anonymity.

Growing pains

Employers are trying to hire more staff and add inventory, especially restaurants, bars and other eateries. Those tasks are difficult, said Tom Bracken, who heads the New Jersey Chamber of Commerce. “This is a significant move forward,” he said in an interview. “We have to understand that when you go from where we were to where we are in a very short period of time, you’re going to have things you’re going to have to overcome.”

Bracken cited the labor shortage which could persist into the summer until the $300 federal unemployment supplement expires in September. “That doesn’t help the summer months. It’s going to be a problem until a lot of the subsidies go away that are keeping people home,” he continued.

Montana recently moved to end the unemployment boost, but Murphy said there were no such plans for New Jersey. “The hiring shortage is truly a crisis,” said Dana Lancellotti, president and chief executive officer of the New Jersey Restaurant and Hospitality Association. “Most employers report that their staff will not return to work while they have the option to remain on unemployment. “The incentive to return to a job when many are making the same or even more to remain home just doesn’t make sense.”

Add to that a J-1 visa shortage, which is used to bring in workers from overseas to fill roughly 5,000 seasonal jobs along the Jersey Shore, and businesses can be squeezed, she added.

Marilyn Schlossbach, owner of the Marilyn Schlossbach Group which operates several restaurants on the Asbury Park boardwalk, said many employers have resorted to offering higher wages and other incentives. “The offering of higher wages is going to create a difficult situation for the industry as a whole when we move closer to normalcy,” said Schlossbach, a member of the NJRHA’s executive board. “We cannot go back from higher wages … At the end of the day, we are all compromised as we try to open up and want badly to increase revenue.”

But progressive advocacy and labor rights groups disputed the claim that $300 supplement is causing the shortage. “Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage,” wrote Heidi Shierholz, director of policy at the left-leaning Economic Policy Institute, in a May 4 blog. “I often suggest that whenever anyone says, ‘I can’t find the workers I need,’ she should really add, ‘at the wages I want to pay.’”

I often suggest that whenever anyone says, ‘I can’t find the workers I need,’ she should really add, ‘at the wages I want to pay.’
– Heidi Shierholz

Sue Altman, who heads the progressive advocacy group New Jersey Working Families, contended that “some corporations still aren’t paying people a living wage” and that higher pay would translate to “a rise in applications.”

The New Jersey Business & Industry Association said the state needs to lift restrictions at childcare centers so that more parents are able to return to work. And the state should consider tax credits or grants to “incentivize return to work over unemployment” and offer employer assistance so that businesses can pay higher wages to attract seasonal workers through the summer and fall.