Why Delaware companies are struggling to fill jobs one year into the COVID pandemic
As more people get vaccinated and return to normal life, the economy is expected to bounce back thanks to demand for activities that were put on hold during the COVID-19 pandemic.
But with that increase in demand, many businesses say they are struggling to hire workers.
The phenomenon is essentially the reverse of a worker shortage, according to representatives in the Labor Department.
There's still a plethora of jobless people to choose from, with more than 31,000 people still collecting unemployment from the state.
But businesses with unfilled spots aren't able to find them.
"What we are hearing, of course, are a need for workers to fill unfilled jobs," said Rachel Turney, deputy secretary at the Department of Labor.
"The workforce is here."
The pandemic-era unemployment system could be contributing to the lack of job-seekers for lower-paying positions thanks to Congress extending unemployment benefits and the state Department of Labor halting the requirement that beneficiaries actively look for work while on unemployment.
As the pandemic draws closer to an end and business restrictions are lifted, demand appears to be rubbing up against the continued government assistance given to jobless people who were laid off due to the virus — something that is unprecedented, says Thomas Dougherty, chief of the Office of Occupational and Labor Market Information.
Businesses struggling to hire could raise wages in order to compete with unemployment benefits, he said.
"When you have the wage going up, you also attract more workers to either enter the labor market or ... attract them from another industry, or maybe attract them from another state," Dougherty said.
"If I'm making such and such money from unemployment insurance, I'm reluctant to take a job that pays the same or less."
Democrats in the General Assembly are trying to pass a $15 minimum wage, gradually raising it from the current $9.25 over the course of several years.
But some business representatives such as the Delaware Restaurant Association, which reports restaurants across the state are suffering from this hiring issue, oppose the measure.
The Department of Labor does not collect data on job openings or unfilled positions. But jobs are increasing in Delaware, with 2,900 new jobs between March and January, according to Dougherty.
The state added 2,300 jobs in March alone, with 1,000 new jobs in health care and 600 new jobs in construction. Overall, the state is still not back to pre-pandemic levels.
Some chains are trying new hiring incentives. Wawa, for example, is offering for the first time a $500 bonus to each new hire.
Job openings in Delaware can be found at https://joblink.delaware.gov.
The Department of Labor plans on reinstating the work-search requirement sometime this summer, according to Department of Labor Secretary Karryl Hubbard. Her department has heard the concerns about unemployment benefits hindering hiring efforts, she said.
"I don't know whether the data bears that out, but we have heard that from some of our stakeholders," she said about concerns over unemployment stunting hiring, citing restaurants.
On May 7, the federal government said employers added 266,000 jobs in April, well below expectations, and the U.S. Chamber of Commerce blamed it on the extra $300 a week in unemployment benefits.
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market," the group said in a statement.
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Restaurants struggling to hire amid grueling path to recovery
Across the state, restaurants, in particular, are facing a lack of job applications, with existing staff unable to fill the gaps.
It's expected to only further impede the already-grueling process of that industry's recovery after the pandemic forced massive layoffs.
"There's an all-out crisis when it comes to workforce recruitment right now," said Carrie Leishman, president and CEO of the Delaware Restaurant Association.
"We're not able to recruit at the pace that we need to keep up with the demand of the public that wants to go out."
She does not think that restaurants should raise wages to compete with unemployment benefits: "All small businesses are paying wages higher than ever before to attract and retain talent."
Hourly wage data from the Department of Labor show that leisure and hospitality businesses were on average paying about $1.17 more per hour in March 2021 compared with March 2020, which is the latest data available. The data does not specify how many of those businesses are restaurants.
Restaurant managers and representatives guess that many of their former workers have chosen different career paths after losing their jobs last year.
People looking for work could be avoiding restaurant jobs because they are seen as unsafe during the pandemic, some labor officials surmised. Health officials have consistently cited restaurants as one of the highest-risk environments for contracting COVID-19.
The restaurant and hospitality industry has consistently filed more unemployment claims than any other sector after Carney ordered all restaurants to stop dine-in services in mid-March 2020 — one of the state's first actions in an attempt to slow the spread of COVID-19.
Now, more than a year later, restaurant traffic still isn't back to normal. But more people are expected to dine out as vaccinations increase and the state lifts its restaurant capacity cap on May 21.
But instead of ramping up business to meet the demand, some businesses have been forced to limit their hours while others are closing entirely. In a Facebook post, Bellefonte Cafe in Wilmington announced it was closing indefinitely until it could hire more staff.
"The recent increase in business has been a boon, but it has also come with challenges," the May 2 post reads. "Our existing staff is not sufficient to meet the mission and they are exhausted."
Other restaurants such as Milton Dough Bar in Milton and Chaps Pit Beef in Rehoboth Beach also announced over the past couple of weeks that they are cutting back hours, citing short staff.
And it comes as the tourism season officially kicks off Memorial Day weekend.
Even larger businesses with multiple locations such as Dogfish Head Craft Brewery are also feeling the effects of the phenomenon. Its restaurants have also had to cut hours to accommodate for the smaller-than-usual workforce, either by closing for lunch or certain days of the week.
"We are not seeing as many applicants flow through, as usual, this time of year," said Ryan Schwamberger, operating manager for Dogfish Head. "I don't think we expected to see the lack of applicants, but it is what it is, I guess, for now."
Dogfish Head is short of about 50 production and hospitality workers this year, Schwamberger estimates — a noticeable shortfall compared with the typical 75 seasonal workers every year, on top of about 100 year-round workers.
The company has been hosting job fairs in the hopes of recruiting more people, he said.
Worker shortages in skilled trades, tech
Delaware is also suffering a trend that was not caused by the pandemic but perhaps accelerated by it: Industries such as skilled labor trades and tech are struggling to fill jobs because there aren’t enough people with the skills to fit those positions, according to Michael Quaranta, president of the Delaware State Chamber of Commerce.
“You’ve got this huge skills mismatch,” Quaranta said.
“We can’t build enough tech people with tech skills fast enough, and we have to do it in order to remain competitive.”
The baby boomer generation's faster retirement rate is in part to blame because it means the state is quickly losing its population of skilled trades workers, he said.
“We've depleted the ranks of electricians, plumbers, carpenters, HVAC, welders, all the skilled trades,” Quaranta said.
“In response, we’ve created these shortages…that are very damaging because there are certain things that technology can’t stand in for."
Those changes were inevitable regardless of the virus, but the pandemic and its resulting economic downturn caused those changes to happen much more quickly, he said.
Going forward, the state will have to change its culture around the traditional career path and secondary education, he said.
“The sooner we can we can help employees of every age and every industry understand that training and upskilling and rescaling is a constant in their life, the better off we're going to be,” Quaranta said.
The state has taken some action to try to bridge the gap.
Through an August executive order, Gov. John Carney created a program funded by federal CARES Act money to help Delaware workers who lost work during the pandemic get training and hiring opportunities in industries where workers are in demand such as health care, building trades, food services, transportation and tech.
That program, called Forward Delaware, has seen over 2,300 people enroll, according to the Department of Labor.
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Sarah Gamard covers government and politics for Delaware Online/The News Journal. Reach her at (302) 324-2281 or firstname.lastname@example.org. Follow her on Twitter @SarahGamard.