What’s causing the labor shortage?
Retirements, benefits shrink local workforce
As businesses emerge from a tumultuous year of pandemic-related restrictions, closed doors and financial uncertainty that forced limited staff, many are struggling to find enough staff to return to full capacity. The factors contributing to this issue have been building for a long time.
Restaurants are open for shorter hours, “Now Hiring” signs are placed in countless storefronts and businesses in nearly every industry are short-staffed.
North Country Workforce Development Board Executive Director Sylvie Nelson said the pandemic only compounded an existing issue.
Many North County businesses have been needing employees for years. This problem is exacerbated in the summer, when the tourism reaches a peak.
The pandemic shifted the workplace from the office to home and shut down many service industry jobs, but now that things are reopening, some people are choosing to stay home, Nelson said.
Anthony Hayden, a local labor market analyst for the state Department of Labor, said the North Country’s labor force is shrinking while the number of jobs is increasing.
He said the number of people in the labor force in Franklin and Essex counties is the lowest it’s been since 1990.
Hayden said the biggest reason for this shrinkage is workers from the Baby Boomer generation retiring from the labor force. He said this started in 2011 and will continue through the end of the 2020s.
Hayden also said issues facing workers, such as finding child care, were exacerbated by the pandemic. Nelson said child care is expensive and hard to find around here, so some are leaving jobs altogether to care for their kids. One parent might return, and the other might stay home with the kids because they can’t afford child care.
Hayden said some people are moving away, and though there has been an influx of people moving into the North Country, at the same time many of these people are working remotely.
“At the end of the day, it’s the unemployment supplements,” said Cory Rohrbach, co-owner of Amado Restaurant and Cafe in Tupper Lake.
Nelson agrees, but she said this is because the additional unemployment benefits gave some the chance to see what life could be like with a living wage.
“Many of the people working in the service sector that were deemed essential were really underpaid,” Nelson said. “Then when you had the (extra) $600 pandemic unemployment insurance … that kind of raised the bar a little bit on wages … People were like, ‘Wait a second, I can make more money on unemployment.'”
Those added benefits have been reduced to $300 a week now and will continue through Sept. 6.
Hayden said research shows unemployment benefits make up a small percentage of the labor force shortage.
Nelson said employers have been critical of these benefits, but she said it’s also on employers to pay their employees an adequate wage.
But small businesses can’t always afford to pay higher, competitive wages. Amado has been able to afford paying higher wages, but not every small business can compete with larger corporations.
“In a lot of cases, the employers were not really being fair to their employees and were not giving them a living wage either,” she said. “If you can’t pay your employees, after a while, as a business owner, you have to look into that. You have to put the pen to the paper.”
After all, she notes, businesses need workers.
“What business owners have to understand is that the workforce is just like a highly efficient machine that they need to be more productive,” Nelson said. “You need to take care of your workforce. You have to invest in your workforce.”
There are few definitive solutions to paying fair wages across the board, Nelson said, and all have downsides. But something’s got to happen, she added.
“It’s all about making money in the end,” Nelson said. “Does that mean we are going to require companies to take less of a profit so they can reinvest in their workforce? That’s a personal, company decision.”
The Franklin and Essex county unemployment rates are now about where they were before the pandemic and the pandemic-related unemployment benefits.
The latest data from the state DOL — May 2021 — shows the unemployment rate in Franklin and Essex counties at 4.8% — slightly higher than pre-pandemic, but down since mid-pandemic. Unemployment peaked in April 2020, with Franklin and Essex counties hitting 16% and 19%, respectively.
But this data does not tell the whole story.
To collect unemployment, one must be searching for a job.
“What unemployment doesn’t take into consideration is that there might be some people out there who are not looking for jobs,” Nelson said.
She said these people may be relying on other social service programs instead.
“Unemployed New Yorkers are required to search for work,” the DOL says. “In fact, New York state regulations require claimants to document their work search efforts and submit proof of them if the DOL asks.”
If someone knowingly falsifies these documents they can be penalized.
The DOL is promoting its new Jobs Express website, where people can look for work and businesses can advertise openings for free. There are currently 180,000 jobs across all industries posted on the website.
ALICE and affording to work
The North Country has a high cost of living and a low median income. Sometimes it’s not affordable for people to work, Nelson said.
For families of four, $15-an-hour wages “does not add up,” she said.
United Way compiles a report of what it calls “Asset Limited, Income Constrained, Employed” households, or ALICE.
These are households of employed people, earning more than the federal poverty level, who still struggle to afford basic household necessities.
“It’s the people who are working, but they’re not making a living wage, so they’re not able to earn as much as it takes to basically function in society,” Nelson said.
“It doesn’t include the trips to Disney World or anything like that,” she added with a laugh.
In 2018, of Franklin County’s 19,088 households, 25% were below the ALICE threshold and 18% were below the federal poverty level. Of Essex County’s 15,425 households, 28% were living below the ALICE threshold and 10% were living below the FPL.
In Harrietstown, 41% live below the ALICE threshold, In Tupper Lake, 37% do. In North Elba, 34% do.
Both Franklin and Essex counties had a median household income of around $55,000 in 2018.
United Way estimates that that to support a single adult, residents of these counties would need to make around $22,000 annually.
To support two adults, that jumps to around $35,000.
Add on two children, and the family must make around $56,000. If those children are in child care, which may be necessary if both adults want to work, the income needed rises around $12,000 per year, to almost $70,000.
Nelson said a minimum wage increase could help people afford to work. The market is already doing this naturally, she said. Businesses are offering higher wages to attract employees on their own.
People need to make more money as the price of goods inflates and inflation is going up faster than anticipated, Nelson said.
Increasing price inflation and minimum wages work in a sort of cycle she said. As prices rise, $15 becomes the $12 of the past. And as wages rise, employers raise their prices to maintain their profits.
Nelson also said if the minimum wage goes up, it devalues the salaries of other industries. She specifically mentioned the health care industry.
“It’s difficult,” she said. “There’s no easy answer.”
There’s no simple answer to growing the labor force, either.
“You can’t create people out of clay,” Hayden said.
He said turnover of employees needs to be reduced.
More education and training is also needed to fill a “skills gap,” Hayden said.
Nelson said professional trainings stalled in the past year-and-a-half because of the pandemic, so there is a shortage of skilled labor.