A shortage of jobs, employees, and service in the time of COVID

A shortage of jobs, employees, and service in the time of COVID

  • Ken Adams, CDC Gaming Reports
May 17, 2021 12:00 AM
  • Ken Adams, CDC Gaming Reports

An economic report by the federal government said the economy is recovering at a record pace, with an annual growth rate is 6.4 percent. And the number of people seeking unemployment aid reached its lowest point since the pandemic struck. Thus far, the post-pandemic economy is as good as anyone dared hope. But at the same time, an unanticipated dilemma is surfacing, a severe labor shortage.

This is counterintuitive. Analysts, politicians and business operators had assumed that people would be as eager to get back to work as they were to get back to shopping and socializing. However, that does not seem to be true. But a number of people are unwilling to return to the businesses that are reopening after pandemic closures and operating restrictions. Retail and service businesses, including casinos, are particularly hard hit. An estimated 3 million hospitality jobs are unfilled currently.

There are several theories about the cause. The two leading theories are both politically charged. One group insists that the government’s Pandemic Unemployment Assistance is the culprit. Those who adhere to that belief maintain people are making too much money staying home to go back to work. Fifteen states have suspended the program attempting to stimulate employment. The number of states dropping the government’s assistance is increasing daily, although there has not been enough time or sufficient data to test the theory. On the opposite side of the debate are those who believe people would go back to work if employers paid more and offered better benefits; childcare is one benefit frequently mentioned. There is no data to support that conclusion either.

However, some numbers are available, though they define the problem, not the solutions. In the April job reports, payrolls increased much less than expected and unemployment numbers edged up slightly (just 260,000). Prior to the report, Dow Jones had estimated that as many as a million new jobs would have been added during the month. And although the unemployment rate is down dramatically from the height of the pandemic, it is still a relatively high 6.1 percent. It was 3.5 percent in 2019, the last year before the pandemic.

Some additional estimates attached to the April job report concerned people’s unwillingness to return to work. Accordingly, six million people cannot go back to work because they need to care for a child, two million have an old person needing attention, and four million are afraid of catching COVID in the workplace.

Gaming is also experiencing a labor shortage, but thus far there is no apparent impact on revenues. In fact, the gaming industry is recovering from the pandemic with surprising strength. In March, gaming revenue reached $4.3 billion, over twice March 2020, and more significantly, nearly 5 percent more than in 2019. Almost universally in March and continuing into April, states are reporting more gaming revenue in 2021 than in 2019. The surge in business is thought to be driven by pent-up demand and government stimulus checks. Both of those have a limited shelf life. By the end of the summer, we should have reached a new post-stimulus and pent-up demand normal. With or without those two, the growth at some point will run up against the labor shortage.

The inability to hire enough people will affect all businesses, not just casinos. It will limit the ability to meet customer demands and provide service in a timely fashion. Wages may be part of the problem, but if it is, the market will force a wage adjustment. Wages will go up as businesses complete for employees. The market pressure will also force improved child and elderly care provisions if those are indeed issues. Whatever is necessary to attract employees will be implemented, at least by some companies. Each of those benefits comes at a cost to the businesses. The cost will limit those businesses that cannot afford to pay it. They will not be able to compete for employees, nor to provide the services that customers desire.

In the end, that will be the real dilemma: How many benefits can businesses afford to provide and remain profitable? It has been an issue for 40 years. Jobs without benefits, or even full-time hours, have been a trend of the 21st century. It began in the 1980s with increases in insurance costs. Providing free health insurance that workers expected was no longer possible. Eventually, year after year, coverage was reduced and employee contributions increased. That trend set the stage for the Clinton and later Obama attempts at a national health insurance. Insurance was not the only change; full-time employment and lifetime jobs are also becoming a thing of the past. Workers have been forced to change their lifestyle expectations and, in many cases, seek second or third jobs to stay afloat.

The timing of the trend was perfect for 21st century business like Uber and Uber Eats. Uber’s business model was built on part-time private contractors, not full-time employees. Uber was eager to provide income-earning opportunities to the underemployed and underpaid. That model works for other businesses as well — restaurants, small retailers, and seasonal businesses, for example. With or without Uber and its ilk, the employment standards of the 20th century are gone. It is necessary to rethink the meaning of employment, its benefits and expectations; we won’t see many lifetime jobs that provide healthcare, job security and retirement in the 21st century, although a few of those will survive. And there will never be enough jobs for the people who need one.

The current employment crisis was created by the opposite conditions. Jobs are left unfilled and that is having an impact on consumers. Recently, a next-office neighbor was standing outside with a client waiting for an Uber pick-up. The client had been waiting for 30 minutes for a ride. The grocery stores where I shop never have enough check-out clerks at busy times. The local Postal Depot and my barber are available only by appointment made at least 24 hours in advance. Shoppers are becoming used to long waits. It is a trend in every service business. It takes employees to provide service. Without enough employees, service slows. Even the Amazing Amazon is limited; it needs people to fill the online and pack orders and drivers to deliver.

Business operators, consumers, and employees will have to adjust their expectations. A fundamental shift is taking place in business and employment. COVID did not create the shift, but it has helped to highlight it. And it will not go away, even when everyone has been vaccinated.