Local restaurant owner Rick Tropiano says he has had to cut hours and may close his restaurant on Mondays.
“By the end of the week, most of my kitchen staff and some of the servers are very exhausted and on overtime and that makes it more difficult to operate profitably,” said Tropiano, who owns and operates Johnny T’s Bistro.
The restaurant is already closed on Sundays.
Economists have dubbed the national labor shortage affecting businesses like Tropiano’s, “The Great Resignation.”
According to statistics from Statista, a company providing statistics for market and consumer data, 4.4 million Americans voluntarily left their jobs in September of 2021. That number represents an all-time high and has resulted in restaurant owners struggling to find employees willing to work.
“Everyone that comes in to get hired or get orientated, they don’t come back, or they claim COVID. So we’re still shorthanded,” said Jordan Oliver, a shift manager at the Hillsdale Wendy’s.
The labor shortage began in March 2020 when the number of people quitting their jobs jumped drastically, according to Statista.
“Before COVID everything was great. We had people here, it was nothing like it is now,” Oliver said.
According to Gary Wolfram, professor of political economy at Hillsdale College, there seem to be several factors at work. Government stimulus checks and unemployment have meant that Americans can get paid without working. Schools switched to online learning during the pandemic, which meant many parents had to stay home with their kids. Additionally, the concern of contracting COVID-19 while working has meant many people quit their jobs for health reasons.
“Nobody has a really good explanation about what is happening,” Wolfram said.
The shortage has especially affected sectors where work is in-person and wages are lower, especially hospitality and the restaurant industry.
“You’re seeing a response to that in terms of higher wages, you drive by and you can see McDonald’s is offering $15 an hour and signing bonuses are everywhere,” Wolfram said. “The market has been responding.”
Small-business owners like Tropiano have felt the affect of the market response while seeking to hire employees at a fair wage while remaining profitable.
“I personally feel that it has really affected people’s way of thinking of what their wages should be,” Tropiano said.
Employers who would like to offer higher wages for full-time adult workers can’t because younger employees who are only available to work part-time also want more pay, Tropiano said.
“It’s very difficult to find adults that are over the age of 18 to want to apply to work full time or part time,” Tropiano said.
This severe labor shortage has proven to be a unique experience for local business owners.
“I’ve been in the restaurant business at various levels since 1983,” Tropiano said. “I’ve experienced times of inflation and times of high unemployment and times of modest prosperity, and Hillsdale has always been a bit slower than the rest of the country in terms of economy.”
Labor participation rates, or the percentage of people actively looking for a job or working in the labor force, have always fluctuated. The sudden plunge of these rates has economists concerned, Wolfram said.
Labor participation rates in the U.S. were 61.6% in October 2021, according to Statista. That number is down from 63.1% in 2019. In Michigan, the rate is 59.3%, according to the Federal Reserve Bank of St. Louis, ranking the state 41st in the nation.
“We’ve not had people quitting their jobs at anywhere near the rate we’ve had, so it’s been a unique experience,” Wolfram said. “That’s why there’s uncertainty about what’s going on here.”
In July, the government began to cut unemployment benefits. As vaccination rates increase and Americans are no longer getting paid not to work, many hoped that workers would re-enter the labor force.
“You would expect to see an increase in the number of people working,” Wolfram said. “The opportunity cost of staying home is now higher.”
In addition to changing attitudes about wages, Wolfram believes that the labor shortage could change attitudes about the necessity of getting a job.
“You may be seeing a movement towards people who decide that they are willing to accept a lesser lifestyle but work fewer hours. That could be what is going on as well,” he said.
Changing attitudes towards work may especially affect households that had two people in the labor force.
“Historically you had a stay-at-home mom. There’s a question of whether the preference for that lifestyle is going to move back because we had this interim,” Wolfram said.
The shortage has meant businesses have had to be resilient and employees and owners have had to work together.
“We help each other, even I work and help them out. So we kind of make it work the best we can,” said Adam Rocha, owner of El Cerrito.
Tropiano said he has turned to his faith.
“Our goal in the long term is to stay viable and stay prosperous and to employ people and build relationships,” he said. “So I look at any of these problems that we’ve had since even the beginning of COVID, and my faith in God is bigger than all these problems. If he wants it to work, even I can’t screw it up.”