WASHINGTON — About 8 million fewer people are working in the United States than before the pandemic hit and there are about 8 million job openings. That would seem to align perfectly for a booming and fast-healing labor market as the nation’s reopening accelerates.
It’s proving not nearly that simple.
“We have job fairs. We have ads going on everything from social media to Indeed, to the Globe and the Cape Cod Times. We’re not getting responses,” said DeWitt Davenport, chief executive of the Davenport Companies in South Yarmouth, which has had to scramble to hire housekeepers and other workers for its five Cape resorts. “This is something I’ve never seen in my entire life of 40 plus years of the hospitality industry on Cape Cod.”
COVID hit the economy last year like a category 5 hurricane, blasting away more than 22 million jobs, upending entire industries, and exposing deep inequities in pay and working conditions. The upheaval is dramatically reshaping the jobs market, leading many Americans, especially in the low-wage restaurant sector, to reconsider their careers, while causing government officials to reassess their policies and business owners to redouble their efforts to lure workers as pandemic restrictions disappear.
“Putting Humpty Dumpty back together again is a monumental task,” said Mark Hamrick, senior economic analyst at financial information website Bankrate.com. “We lost 22 million jobs in March and April last year, and those puzzle pieces are not going to fit back together the same way they were before.”
Alex Gladwell, 33, of Chelsea, is one of those shifting pieces.
She had worked in the restaurant industry for 19 years until her job as a server and bartender at Evoo in Cambridge disappeared when the pandemic hit. She’s not going back, not even part time. Gladwell found a more stable job — on salary, with normal hours and more affordable health care benefits — as assistant director of the food program at Rosie’s Place, a women’s shelter in Boston.
“I think having that pause, it just highlighted the issues within the industry like the pay structure and the inequity,” she said of her time out of work before starting her new full-time job in December. “The stress of not knowing what you’re going to make per shift is just not worth it.”
Gladwell has plenty of company in her rethinking.
A Pew Research Center survey in January found that nearly two-thirds of unemployed Americans had seriously considered changing their occupation or work field. In the restaurant industry, 53 percent of workers said they were considering leaving their jobs during the pandemic, with more than three-quarters citing low wages and reduced tips, according to a survey released this month by One Fair Wage, a Cambridge group advocating for higher pay for restaurant workers, and the Food Labor Research Center at the University of California, Berkeley.
All this change complicates the forecast for the labor market recovery. Job growth slowed sharply to 266,000 in April, well off the nearly 1 million new hires that analysts had predicted after overall economic activity soared in the first three months of the year.
Economists were quick to warn that one month doesn’t make a trend and noted that the United States still has averaged a strong 524,000 new jobs over the past three months. But the report and other recent government data show there’s still a long way to go in reassembling a labor market hit by an unprecedented shock.
“I never said — and no serious analyst ever suggested — that climbing out of the deep, deep hole our economy was in would be simple, easy, immediate, or perfectly steady,” President Biden said Monday. “So, some months will exceed expectations; others will fall short. The question is, ‘What is the trendline? Are we headed in the right direction? Are we taking the right steps to keep it going?’ And the answer, clearly, is yes.”
Business groups and Republicans argue that government pandemic relief, particularly unemployment benefits that last longer and pay more than usual, has resulted in many low-paid Americans making more money staying at home than they would on the job.
“We’re competing with the federal government. Their pay rate to have people sit at home is higher than market rates for many jobs,” said Davenport, who has had to bring in 100 workers from Orlando to staff his resorts this summer. “Where’s the incentive?”
Those extra unemployment benefits will expire in early September, but at least 16 states, all led by Republican governors, now plan to end them earlier, some as early as June, to remove any disincentive to going back to work. Massachusetts Governor Charlie Baker said on Wednesday that he had no plan to join them.
“We’re in a period where they’re still comfortable and they’ve got money and they don’t need to take a job,” Bill Dunkelberg, chief economist at the National Federation of Independent Business, said of many unemployed Americans. “A lot of them are still worried about contracting the virus at work, so that’s also slowing them up.”
The small business advocacy group’s monthly survey found 44 percent of small business owners in April reported having job openings they couldn’t fill. It was the third straight month the survey, which began in 1973, had set a record for unfilled jobs and double the average reading over that time.
Maryann Newman, who along with her husband owns Tom’s Discount Store in Salisbury, said they’ve had trouble hiring part-time entry level workers, who earn the state minimum wage of $13.50 an hour. Increasing pay would require raising prices, which they don’t want to do, she said.
“We’re getting applications from people. The wage is advertised. But then when we contact them they either don’t respond, don’t show up for the interview or don’t show up for the first day of work,” Newman said. “That’s never happened before.”
The leaders of business groups like the Greater Boston and Cape Cod chambers of commerce are so concerned that they urged the state on Friday to use federal pandemic rescue money to offer bonuses of up to $1,500 to people on unemployment who return to work. Montana recently launched a similar program in conjunction with ending enhanced unemployment benefits next month.
Studies of an even larger boost last year in weekly unemployment benefits found no evidence that it reduced employment. And if there were a disincentive right now, wages would be rising more strongly to offset it, said Valerie Wilson, an economist at the Economic Policy Institute, a progressive think tank.
The Labor Department’s employment cost index showed that wages and salaries for private industry workers were up a solid 3 percent for the 12 months that ended in March. But that was a slower pace than the 3.3 percent annual gain reported a year earlier when unemployment was still low. The figure for food service and accommodations businesses was up 5 percent in March, showing more wage pressures in that sector.
While there are 8 million fewer workers than when the pandemic hit, the total number of unemployed Americans is higher. There were 9.8 million people classified by the Labor Department as unemployed in April, and an additional 6.6 million who wanted a job but were not counted in the labor force because they weren’t actively looking for work or unavailable to take a job.
Still, the possibility that enhanced unemployment benefits could be a disincentive highlights one of the flaws in the pre-pandemic labor market and the need for changes, said Wilson, who heads the think tank’s Program on Race, Ethnicity, and the Economy.
“The fact that someone may make more though unemployment insurance than working would strongly suggest there was a problem there to begin with, that wages are so low in some occupations that it would be more worthwhile not to work than to go to work,” she said.
That’s been the case in the restaurant industry, said Saru Jayaraman, director of the UC Berkeley Food Labor Research Center.
“It’s frankly frustrating that everybody right now is saying, ‘Why aren’t these workers coming back?’ when we’ve been saying it for a year — they’re not going back,” said Jayaraman, who also is president of One Fair Wage.
Food preparation and serving already was the nation’s lowest-paid occupational group before the pandemic, with a median annual wage of $25,500, according to the Labor Department. It only got worse over the past year, with the risk of catching the virus combining with a drop in tips and increase in sexual harassment in a field where women workers are the majority, Jayaraman said.
She doesn’t believe unemployment benefits are the reason why restaurant workers aren’t returning to their jobs. Most states have a lower minimum wage — as little as $2.13 an hour — for workers who get tips. Many of those states, including Massachusetts, require that tips bring a worker’s pay up to the full minimum wage or the employer must make up the difference.
Many workers and employers don’t declare tips, meaning unemployment benefits for those workers wouldn’t come close to their normal pay. In addition, undocumented workers are ineligible for unemployment benefits. Gladwell and a friend started Restaurant Workers Mutual Aid of Greater Boston to provide donated food to undocumented restaurant workers who need it.
Louisiana has a $2.13 minimum wage for tipped workers, and the reliance on tips is among the reasons Caroline Caliva, 25, of New Orleans, opted not to return to the restaurant industry after losing her job as a server in March 2020.
“It’s really exhausting work, emotionally and physically,” she said. “I just didn’t feel like going back to make money on tips.”
Caliva used her time out of work to earn a certificate in information technology. She hasn’t been able to land a position in that field yet so is working as a hotel concierge. The pay’s not ideal — $9 an hour plus commission — but it’s more dependable than at a restaurant, she said.
“Hotel work is still hospitality, but I’m out of work by 7 p.m.,” Caliva said. “I’m not having to stand on my feet all day running around.”
Restaurants are competing for workers with employers in other sectors as job openings hit a record 8.1 million in March — nearly 1 million of those in the food services and accommodations sector. Job postings on online jobs site Indeed are up 23 percent compared to before the pandemic, said Jed Kolko, the company’s chief economist.
“People are more confident in finding a job now … so they might feel more comfortable waiting rather than taking the first job,” he said. Now that people are vaccinated and can safely gather, they might want to travel to see family before going back to work. That could leave the labor market in uncharted territory until the fall, when the reopening of schools will ease child care problems as well.
“It may not be until the end of summer when the school year starts and people have taken the trips they’ve been putting off until we hear fewer stories about difficulty hiring workers,” Kolko said.