A Belleville tire service station is one of countless businesses seeking help. (Photo by New Jersey Monitor)
Nancy Mercurio is looking forward to Sept. 6.
Mercurio, who owns a Haddon Heights dog sitting business, brought back most of her employees when appointments resumed in June 2020. A few didn’t want to come back, she said, so she’s had three positions open for months.
The responses she’s gotten aren’t encouraging. Some interviewees don’t have cars — a requirement for the job — or they’re too young. Others live too far away. One person wanted a $35 hourly wage, which Mercurio said she could not afford.
“I had one girl say that she’ll apply after September, because she wants to collect unemployment as long as she can,” said Mercurio, who estimates she’s lost $10,000 from turning customers away due to short staffing. “So we’ll see if there’s an uptick once unemployment ends and they’ll be looking for a job.”
After a rocky 18 months of the pandemic ravaging the economy, the labor shortage is ubiquitous to business owners across the country, who are hopeful the waning off of coronavirus-related benefits will lure people back to work. Some end on Sept. 6.
But a lot has changed since the first coronavirus shutdown in March 2020, and economists and business leaders agree it’s going to take a complete rethinking of the labor market to reveal the clear path to recovery.
Michele Siekerka, president of the New Jersey Business & Industry Association noted New Jersey remains in the top ten for highest unemployment rate across the nation, at 7.2%.
“We’re limping,” said Siekerka. “We’ve all made a plea for workforce to come back, but people just are leaving jobs they have no desire to come back to, or can’t come back to.”
Federal unemployment boost expiring
Federal unemployment benefits are slated to end Sept. 6 — that includes Pandemic Unemployment Assistance (PUA), which provides benefits to workers not typically eligible for unemployment benefits; Pandemic Emergency Unemployment Compensation (PEUC), for people who have exhausted their state benefits; and the Federal Pandemic Unemployment Compensation (FPUC), which provides the weekly supplemental $300.
Those benefits have been a lifeline for furloughed or laid-off workers during the pandemic. What happens when they lift?
James Hughes, a Rutgers economist studying the effects of the pandemic, said he does not expect an overnight hiring boom.
“There’s simply a lot of possibilities and a lot of unknowns. We thought we’d be able to make nice, easy forecasts,” he said, “but recovery is never smooth and even.”
More than unemployment benefits
In 25 Republican-led states, some federal unemployment benefits were cut to entice people to go back to work. But in the two months since, studies have found it didn’t lead to a spike in overall hiring, but a change in the workforce.
“There’s just so many different patterns of behavior right now so there’s no simple answer,” Hughes said.
People won’t go looking for a job the day after losing their benefits, he said. And prospective employees may wait for jobs that offer higher wages or more flexible hours, or they may wait for the perfect gig.
According to the state Department of Labor, more than 500,000 people are collecting FPUC with unemployment benefits. Plus, the Labor Department will begin enforcing the work search requirement, and refusing to return to work is a disqualifier for benefits.
But other factors — child care, health concerns — are what’s really holding the workforce back from its full strength, economists said. It’s not just money from unemployment benefits keeping people home.
Mothers, for example, left their jobs at higher rates due to the continuing restrictions on child care facilities and remote learning. With schools in New Jersey are set to re-open next month, more women may re-enter the labor market, Hughes said.
On the other hand, boomers have retired and some millennials have moved to the suburbs to raise families, making the workforce in some areas permanently smaller than it was pre-pandemic, he added.
“I don’t think any state was hit as hard as us, so it’s not surprising we have a deeper hole to dig ourselves out of,” Hughes said.
During meetings with small business owners, Siekerka said she encourages hirers to rethink their business models, whether that’s allowing employees to work remotely, automating jobs, or giving bonuses to workers who stay for more than six months.
“This is why there’s no one policy that’s good,” she said. “In the end, our policymakers need to address the different environments and types of workforce to be effective.”
There are measures that should be put in place to help jumpstart the economy, especially after the government-mandated lockdown, she said. The NJBIA sent the Murphy administration a list of 10 suggestions to put in place. Some, like the recommendation for teen workers to work over 40 hours a week, were instated.
There’s a bill that would provide a tax credit to businesses who increase their salaries to bring back their workforce, but the measure, S3759, is lingering in committees and wasn’t voted on before the state Legislature took its summer recess.
Delta variant brings apprehension
Siekerka worries the Delta variant will be devastating to New Jersey, which has lost more than 30% of its businesses since the pandemic began, and has a long recovery to go.
“We have a small business community that’s hanging on by a thread,” she said. “They’ve worked their tail off over the summer to make up for lost time.”
She noted some business owners adjusted quickly after the March 2020 shutdown, so there’s less of a learning curve. But another shutdown or more restrictions would be detrimental.
“We don’t think mandates on businesses are the answer, and we need to proceed very carefully. We need people with boots on the ground to make the best decisions for the customers they serve and the workforce they have,” she said.
And a shutdown at schools could also inevitably keep parents, mostly mothers, at home. And high-risk residents might not be able to go back to work until the COVID-19 threat is nearly gone.
Hughes noted the long list of Greek-named variants could begin to attack industries that have largely recovered, like airlines, restaurants, and hotels.
“All that could be hindered by another health crisis,” he said. “I think growth would continue, but it’s going to be dented from what we would have projected two months ago.”
After 10 years of being open, Mercurio said 2019 was the best year for No Place Like Home Pet Sitting & Dog Walking. And even with the pandemic, 2021 hasn’t fared too badly for her, but another shutdown could be dangerous for her business.
“It’s going to be interesting to see what happens once September rolls around. At this point last summer, I wasn’t sure we’d be able to survive the pandemic, and now we’re so busy I have to turn business away,” she said.
She added: “With the Delta, I’m like, let’s cross one bridge at a time, because who knows what’s going to happen?”
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