The nation’s pandemic-driven labor shortage could wreak havoc again this summer on a number of seasonal shops, restaurants and bars, economic experts warn.
And the places that remain open might have to dramatically raise prices as a means of keeping up with the high demand for high-quality workers.
The labor shortage, which began in 2020 at the outset of the COVID-19 pandemic in the U.S., has forced a number of small businesses to limit working hours or close altogether due to staff-filling difficulties.
Studies also show that venues such as beaches, hotels, restaurants and public pools have been hit hardest by the worker shortage.
In the summer hotbed of Cape Cod, Massachusetts, Polar Cave Ice Cream Parlour has struggled to find quality workers and produce consistent revenue, coinciding with the start of the pandemic..
“We knew we were going to have a busy summer. But no employer that I know — and I know lots of them — could’ve dreamt that it’s like, ‘What, no one is applying?‘” owner Mark Lawrence recently told The Washington Post.
With a lack of additional help, Lawrence said his store has been hindered by a lack of efficient service. Customer wait times have gone up substantially, with some waiting 45 minutes for their orders.
On the one hand, Lawrence is thrilled to have a loyal customer base. But then again, he can’t help but wonder, “What’s [Cape Cod] going to be like when school is out and people are coming for their summer vacations?”
What can explain the worker shortage? For starters, employees at established, year-round companies have been resistant to accept seasonal jobs in lower-wage industries — namely hotels and restaurants.
But that business model still has some upside.
According to the Bureau of Labor Statistics, restaurants and bars have brought back thousands of jobs lost as a result of lockdowns and COVID-related restrictions — up to 12,000 jobs.
On the flip side, April saw a record 4.5 million Americans quit their jobs, a number that has remained inflated as “employers continue to hike wages to retain and lure employees,” citing government data.
As a partial consequence, employment remains short of pre-pandemic levels — 6.4% below the 12,360 reported in February 2020, according to data from the Bureau of Labor Statistics.
The employment crunch has seen many struggling seasonal businesses such as restaurants, hotels and summer camps raise wages in an effort to attract high-quality, motivated workers.
Hotels have also failed to bounce back amid recovery from the pandemic, with employment at such establishments down 20.7% this past March compared with February 2020.
“Hotels hit pause on hiring during [the wave of the pandemic variant] omicron and were unable to keep up as demand surged back in February and March,” said Sourav Ghosh, chief financial officer at Host Hotels & Resorts Inc., in early May.
The company owns more than 70 hotels in the U.S.
“While our hotels continue to fill open roles, a lag between demand and staffing levels still exists,” Ghosh said.
As businesses try to entice new workers with higher wages, experts warn about the perils of high inflation — which recently hit 40-year-peaks in the U.S. — leading to potentially untenable price increases.
And as employers hurriedly onboard new staffers with the promise of inflated salaries, the odds of finding a job — and keeping it — are currently in the workers’ favor.
“Given how tight the labor market is,” Stephen Stanley, chief economist at Amherst Pierpont, told the Post, “firms are likely being extremely cautious about laying anyone off permanently.”