At full employment, Walt Worthy employed more than 1,200 people at his five Davenport hotels and restaurants. As of last week, he only had 334 employees and continues to struggle to find helpers even as the Spokane-area economy begins to shed the worst effects of the coronavirus pandemic.
The hiring situation is so dire that Worthy has been unable to open the Post Street Ale House and only this week was he able to open, with shortened hours, the restaurant at The Centennial by Davenport Hotels. Even raising beginning wages to $15 an hour for housekeepers has only helped a little, he said.
“We are competing against unemployment,” Worthy said, referring to workers choosing to receive state and federal assistance rather than seek a job. “All the hard times you hear are going on out there and you can’t find people who want to work.
“I had no idea we would be dealing with this.”
Employers are facing similar shortages nationwide, but economists warn that the labor shortages are not as simple as workers taking the easy road of government assistance rather than seeking jobs.
Many workers are using the time to seek better pay or benefits or careers in fields less likely to be affected by further pandemic-related shutdowns.
Still others may have medical conditions that cause them fear to returning to work until more of the population receives the vaccine, said Grant Forsyth, chief economist for Avista Corp.
The pandemic has also hit the economy for working mothers much harder than men because of school shutdowns, which created an immediate lack of child care that has forced many working mothers to bow out of the workforce, he said.
“If you look at the share of women in public-spacing industries, where there’s a lot of interaction with other people, it’s heavily dominated by women,” Forsyth said. “COVID slammed into these industries.
“Not only are they dealing with job losses in industries they tend to dominate, they are also dealing with the loss of child care because of related-educational closures.”
As for the theory that workers are choosing unemployment benefits over working, Forsyth said recent research by the Federal Reserve shows that while a combination of state and federal benefits paid some employees more to stay at home, the full answer about the country’s labor shortage is much more complex.
“The decision to return back to work is multidimensional,” he said. “It’s not just about what you are getting paid by unemployment.”
State-sponsored unemployment benefits typically paid about 50% of workers’ salaries prior to the pandemic.
The U.S. Cares Act kicked in another $600 a week, which was later reduced to $300.
But under the $600 weekly benefit, unemployment offered some employees more money to stay at home. Those federal benefits, however, are due to expire this fall, he said.
“There is a tipping point where the income and terms of unemployment will gradually start to go back to what it was before,” Forsyth sad. “That will cause people who may have been holding back to return to work.
“I think it becomes easier to pull back on the employment benefits when you have clear signs that the economy is more robust, and the job growth has become more robust.”
For example, the state Employee Security Department previously required out-of-work residents to show they were looking for work to qualify for state benefits. That work search requirement was waived early in the pandemic, said Nick Demerice, the director of public affairs for the ESD.
As infections rose, many employers sent workers home temporarily with an unclear idea when it would be safe to bring them back to work, Demerice said.
“Having them do work search did not make a ton of sense at that time, when major segments of the economy were shutting down,” he said.
The Washington state Legislature passed a resolution authorizing Gov. Jay Inslee to decide when the work search requirement will be reinstated.
“I think it will be a point of continued conversation about the right time to turn that back on,” Demerice said.
He noted that a state resident receiving the minimum weekly state-unemployment benefit, plus the $300 a week federal assistance, pays about what they would receive from a $12 an hour job.
“It’s certainly unlike any other employment downturn in our history,” Demerice said. “It’s been different from the beginning, in terms of who became unemployed and for what reasons. I think this has continued to be the national story and will continue to be so as states reopen.”
The situation is also forcing state leaders to rethink how to deploy resources to help workers find new jobs. The ESD partners with county workforce offices to help unemployed residents find jobs.
Mark Mattke, executive director of Spokane Workforce Council, said his office recently has seen an increasing number of those seeking his services.
“We are hearing from a lot of employers about difficulty finding entry-level workers,” Mattke said. “But we are seeing higher numbers of people coming in seeking employment.”
Many raised the same concerns mentioned by Forsyth: They are afraid to return to work for health reasons, child care or they are waiting for their jobs to return.
“Some left the service sector because of the volatility of it and they are deciding to go into other industries,” Mattke said. “Others are waiting for a better economic opportunity.”
As for those happy to stay at home with state and federal benefits, Mattke said a certain population will always take advantage of that situation.
“Folks are always looking at their bottom lines and trying to figure out if it’s better to collect benefits or go back to work,” he said. “We can do the math for them. ‘Here’s the benefits you might get for that job versus what check you are going to get from unemployment.’ ”
Chef Adam Hegsted, who runs seven restaurants in the Spokane area, said he, too, has struggled to find employees even with offering them health benefits and a 401k. He’s started offering a $1,000 bonus if employees stay through the summer.
“Normally, we have a pretty rigorous hiring process. We have had to change that,” Hegsted said. “Right now, we are looking for people with good attitudes and people we can train as opposed to traditional work experience.”
Forsyth said the country’s demographics, including an aging work force, lower birth rate and fewer immigrants coming into the country is further squeezing the available labor force.
As for the argument that unemployment benefits have caused the labor shortage, Forsyth said the conversation should include what would have happened to the economy had state and federal leaders not provided extra assistance.
“At the beginning of the pandemic, if you look at the number of people who initially lost their jobs, consumption spending would have dropped like a rock,” he said.
“What we learned from the ’30s was if you don’t do something about that, it makes the downturn very deep and difficult to get out of.”
The two rounds of stimulus checks kept Americans spending, which in turn provided revenue for those businesses that were able to remain open.
“I think people have lost sight, a little bit, about why they moved so quickly on this,” Forsyth said. “When you have mass unemployment, you want to make sure that consumption spending doesn’t collapse. I’d say so far, it’s been somewhat successful.”
With the ongoing labor shortage and challenges for women re-entering the workforce, nothing will get completely solved until vaccination rates get high enough to make the public feel safe about returning to normalcy, he said.
“This is one of those interesting events in history that probably will have permanent legacy effects,” Forsyth said. “What exactly they will look like, it’s still too early to tell.”
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