At the announcement of global pandemic in March 2020, about two-thirds of Leon Cox’s staff — and most workers across the hospitality industry — became obsolete.
“I had to lay off 60 to 75% of our people,” said Cox, general manager of downtown Raleigh’s Sheraton Hotel. “I know it was about the same for my peers across the country.”
When most state-imposed restrictions loosened in early summer, workers started trickling back. But Cox has only regained 60% of the staff he maintained before COVID-19 flattened the economy.
“It’s a day-to-day struggle to get people to come back,” he said. “...Part of the problem is looking at it like it should be the way things were before. But how do we navigate where we are now? You have to play on the field you’re on right now.”
Cox’s dilemma is part of a national story. Employers everywhere are hard-pressed to secure labor. With few exceptions, the struggle transcends industries. Compared to the 500,000 new hires analysts expected in September, the U.S. Bureau of Labor Statistics reported just 194,000. The unemployment rate fell by 0.4 percentage points to 4.8%, but it’s still above pre-pandemic levels.
The shortage is not for lack of opportunities. Many employers have jobs to offer, but prospective workers are demanding better conditions. In North Carolina especially, there’s an employer reckoning underway. By some standards, the state ranks worst in the country for employee wages and worker protection, as The News & Observer reported last month.
Without substantial change, hiring challenges could endure long after the pandemic ends.
“The erosion of employer power began during the low-unemployment years leading up to the pandemic,” a New York Times analysis said this summer, “and, given demographic trends, could persist for years.”
Where are the workers?
As vaccine accessibility improved over the past few months, and after extended unemployment benefits expired at the beginning of September, many experts awaited a hiring boom. It has yet to arrive.
“A lot of people thought there was going to be this sudden surge of job seekers,” said Barbara Brothers, business engagement director at Raleigh’s Capital Area Workforce Development. “We saw some more activity, but we did not see a surge of activity.”
CAWD is a public-private partnership within the Wake County government that “focuses on economic development by ensuring the local workforce has the skills, training and education to meet the needs of local employers,” according to its website. As business engagement director, Brothers is especially attuned to the subtleties of an evolving employer-employee dynamic.
“Some of what I think we’re seeing is an acceleration of what was already existing before the pandemic,” she said.
The most obvious deterrent for many would-be employees is insufficient wages.
“The salaries are too low, so we’re seeing job seekers who are holding out,” Brothers said. “They’re not really entertaining low-paying positions... Some workers aren’t even considering that in order to return to the workforce. So we are seeing that as a point of mismatch.”
With nationwide inflation swelling the costs of everyday wares, many workers need higher salaries to justify their efforts. In Brothers’ experience, the magic number for an entry-level salary in today’s market is $16 an hour.
“We’ve had some employers who have been able to increase their hourly wages and they’re finding success,” she said. “Some of them have increased their hourly wage on these entry-level jobs $3 to $4 an hour because, again, right now it seems to be $16 an hour or $16.50 is the sweet spot where suddenly the job seeker’s willing to entertain that opportunity.”
‘It couldn’t wait any longer’
At the pandemic’s worst, Locals Oyster Bar — with locations in Durham Food Hall and Transfer Co. Food Hall in Raleigh — lost more than 70% of its workers. To combat the shortage, its owners resolved to make some radical changes.
In a traditional restaurant structure, “front-of-house” employees, those interacting with customers, earn a salary at or below minimum wage supplemented by tips. “Back-of-house” employees — line cooks, dishwashers and other unseen staff — often earn minimum wage or slightly above, but do not receive tip money.
“Well, we did away with that system,” said Eric Montagne, Locals’ head chef and part-owner. “And we then elevated everybody’s hourly rate well above what minimum wage is and we do a full house tip share. Front of house and back of house share all the tips.”
Starting salary before tips is about $11 for dishwashers and other support staff, Montagne said. Line cooks begin at around $15, depending on experience. Locals also launched a benefits program, subsidizing 50% of health coverage and matching 3% of contributions toward an IRA.
The new compensation structure was a gamble, Montagne said, but it worked. From a pandemic low of about 10 employees, the restaurant’s staff has increased five-fold with only a couple of spots still vacant.
“We had wanted to do these things, but the pandemic really gave us a sense of urgency that it needed to happen now,” Montagne said. “It couldn’t wait any longer.”
‘It’s not just about money’
For many employers, though, the travails of hiring are more complex than salaries and benefits plans. Locals Oyster Bar’s success doesn’t represent the market at large, even among employers who increased wages.
Cox, the Sheraton’s general manager, increased many wages by about 20%, he said. But it hasn’t mitigated his staffing shortage.
“It’s not just about money,” Brothers said, “although that helps. Its flexibility and openness to making changes to how they recruit and attract talent has been bigger in some employers’ success stories.”
That’s good news for business owners who lack the capital to guarantee higher salaries. It’s the intangible benefits of some jobs that most attract new talent.
“Not everybody can afford the wage increase,” Brothers said. “But one piece that I think in particular smaller companies can take advantage of is they have a lot to offer compared to a larger corporate environment because they can offer a culture piece, and they really need to embrace and promote that.”
Atypical scheduling options, work-from-home days and explicit provisions for mental health needs all rank among the most important factors post-pandemic job seekers look for in new opportunities, Brothers added. Jobs that meet those needs will most entice the increasingly scrupulous labor pool.
“We probably all agree the challenge isn’t going to go away quickly,” Cox said. “The goal can’t be to get back to the way things were before (the pandemic). It’ll be a process to figure out where we are now and looking at it from that perspective.”