The tables have turned and it's a workers' market

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Press Herald 27 June, 2021 - 06:00am 55 views

The causes of Maine's labor crisis are more complicated than generous unemployment benefits. Lack of day care, fewer foreign students, fear of COVID and lifestyle changes are transforming the workplace.

Murray Perce can sum up the Maine labor market in two words.

“Opportunities abound,” he said, glancing over a gym full of employers gathered at the Boothbay Harbor YMCA for the first in-person job fair hosted by the Maine Department of Labor since early 2019.

Perce was looking for something new after leaving his job as a health and safety inspector at a local manufacturer.

“Boy, I never knew how unhappy I was until I stopped doing it,” Perce said.

Perce is one of thousands of Mainers re-evaluating their jobs and careers, forcing employers to adapt to a transformed labor market.

The 59-year-old wants something he’ll enjoy to spend the years before retirement. He’s in luck – with a large and diverse selection of open jobs, increasing pay and employers urgently hiring, hourly wage earners now have tremendous bargaining power in Maine’s labor market.

The 22 companies attending the June 15 Boothbay Harbor hiring fair outnumbered job seekers about 2-to-1. Human resources staff and managers stood behind folding tables strewn with promotional material and job applications. Some spent more time making small talk than interviewing job seekers.

“I was disappointed with the turnout,” said Sara Morin, human resources director at Washburn and Doughty Associates, a Boothbay shipbuilder. “I’ve been doing HR for 15 years and I’ve never seen anything like this.”

Ben Quirion gets help at the register from Allie Ivarra at Monte’s Fine Foods in Portland, where he just started working. Derek Davis/Staff Photographer

The desperation of Maine’s struggling tourism and restaurant industry to find workers has captured media attention, but Morin has a different problem. The shipyard needs skilled labor – pipefitters, painters, electricians, and welders. It relies on contractors from away to fill gaps.

A help wanted sign on Route 1 in Saco. Derek Davis/Staff Photographer

“There just aren’t that many people going into trades,” Morin said. “We need first-class welders and we can’t find them. Out-of-state contractors hired from down south has been a temporary fix, but we’d rather hire local people.”

As Maine and the nation recover from the coronavirus pandemic and economic meltdown that accompanied it, the labor market has been turned on its head.

Tens of thousands of people in Maine collect weekly unemployment benefits at the same time employers have open jobs. But what is happening in Maine’s labor market is more complicated than unemployment benefits keeping people at home and out of work.

Interviews with labor experts and Maine employers reveal the causes are wide-ranging:

Some workers in low-wage industries, such as hospitality and retail, can earn more on unemployment than they did at their old jobs, according to research from the Maine Department of Labor. Benefits can prolong unemployment and give jobless workers flexibility to look for positions they want, said Phil Trostel, an economist at the University of Maine.

“The research that has come out suggests extra benefits have led to longer jobless duration and higher unemployment, but it is a magnitude that isn’t extreme,” Trostel said. “I don’t think there are many people who are expecting to get unemployment benefits for perpetuity; it just does not happen.”

Maine employers added more than 33,000 jobs after emerging from lockdown in May and June last year, the biggest monthly employment gains on record. At the same time, enhanced unemployment was $600 per week – double the current benefit. When the enhanced benefit expired last July, unemployed workers did not flood back to employers. Instead, job creation slowed, then flattened.

But in the aftermath of a tsunami of joblessness sparked by the pandemic, something else happened – people left the workforce entirely.

In May, there were approximately 28,500 fewer people in the state’s labor force than before the pandemic. Maine’s labor force participation rate was 60 percent, down from almost 63 percent before the pandemic and the lowest point since 1978, a period of severe economic recession, high inflation and unemployment. The national labor force participation rate for the same month was 61.6 percent.

“Labor force participation spiked downward dramatically in the pandemic and recovered a little bit, but hasn’t come back to anything close than it was,” Trostel said. “It has not recovered in Maine more than nationally. For that reason there is some reason for worry that the labor force in Maine has shrunk permanently.”

For some, the coronavirus remains a barrier to returning to work. Parents and families still have care responsibilities as schools were not fully open. Child care can be scarce and expensive, partially because of staffing challenges in that industry.

A U.S. Census survey in March showed that 15 percent of jobless Maine residents listed caregiving as the reason for not working. Another 22 percent listed personal health or safety as a reason. Even as vaccination rates climb in Maine, people still get sick and die from COVID-19 every week.

Seasonal hiring for the tourism industry, always a challenge, is even harder this year because reliable foreign student workers can’t travel to the U.S., exacerbating longstanding issues related to expensive coastal housing and transportation limitations.

Underneath the immediate issues is an aging, retiring workforce with few young people to replace it.

“The demographic challenge here is more pronounced than the nation, but it is happening elsewhere,” said Mark McInerney, director of the Maine Center for Workforce Research and Information. “The upper-end baby boomers are retired or near retiring. A very large portion of the labor force is expected to retire in the next five to 10 years.”

A hiring frenzy in Maine’s food, beverage and hospitality industries is understandable. Hotels, breweries, restaurants and entertainment venues laid off more workers than other industries at the pandemic’s onset and were under COVID-19 restrictions longer than most other businesses.

But those businesses have also had the highest proportion of job recovery, accounting for one in three jobs created since April 2020, according to the Maine Department of Labor.

Maine JobLink, the state’s employment website, has more than 17,000 current positions, compared to about 14,500 on the site at the beginning of the year. Stiff competition for labor pushes employers to offer pay much higher than Maine’s $12.15-per-hour minimum wage, as well as fringe benefits such as health insurance, retirement plans, paid time off and sign-on bonuses from a few hundred dollars to $1,500 subsidized by a new state program.

Phil Smith says he received a hiring bonus, and the job with The Dump Guy includes benefits. Derek Davis/Staff Photographer

Garrett Gordon, co-owner of The Dump Guy, a booming waste removal businesses in Scarborough, raised the starting wage for foremen from $16 to $18.50 an hour after training, with a $1,000 bonus after a month on the job, tips, performance bonuses and benefits.

“I’m one of the only guys that is fully staffed right now, but I’ve had to do lot to compensate our workers,” Gordon said. “It is a job market I’ve never experienced in 15 years I’ve owned the business.”

The Dump Guy offer appealed to Phil Smith. The 28-year-old was making $18 an hour at a local seafood processor this spring, but only getting 10-15 hours a week. Now, Smith can work as much as he wants and support his three young children.

“Since I started two months ago, I only hit under 45 hours maybe once in a five-day week,” Smith said.

“There are so many incentives here, it is crazy. I don’t know who wouldn’t want to work this kind of job. It’s very intense work, but I’m that kind of guy – I’d rather be doing this than sitting behind a desk or twiddling my thumbs all day.”

The current moment is precisely how a free labor market is expected to work – when demand is high, employers have to “sweeten the deal” to compete for workers, said Sylvia Allegretto, who co-chairs the Center on Wage and Employment Dynamics at the University of California, Berkeley. Employers, and consumers, are accustomed to paying less for jobs perceived as low-skilled work, she added.

“The fact that you have to think about raising wages is shocking to these people. A healthy economy would be operating like this all the time. We are not used to the idea that low-wage workers have any bargaining power,” she added.

A help wanted sign in front of Blast from the Past Too Diner. Derek Davis/Staff Photographer

Linda Morin gets it. The owner of Blast from the Past Too has multiple “hiring” signs in front of her diner on Route 1 in Scarborough.

“You can’t find a cook,” Morin said. “Once COVID hit, they got laid off and make more money staying at home or they just wanted to get out of the industry.”

Hiring was tough even before the pandemic, reflected in the entry-level wages she’s offered the last few years. Dishwashers start at $15 an hour and Morin offered a new cook a $1-per-hour raise – to $17 an hour – after just one week.

“The market takes care of itself,” Morin said. “This is nothing new with kitchen help; this has been happening for three or four years. You can’t pay minimum wage if you want work in the kitchen.”

At a restaurant hiring event in Portland last week, Charlie Stuart, 21, was one of the few attendees, and the rare candidate willing to start at the bottom in the kitchen.

“I’m thinking of a dishwasher position and moving my way up to being a cook someplace,” Stuart said. He works as a retail cashier at a local pet supply store now, but his time cooking at home during the pandemic made him think about trying restaurant kitchens as a career.

“I want to do something a little different,” Stuart said. “Being a cashier gets old after a while.”

A sudden tightening of the labor market makes it easy to forget that Maine has had a workforce challenge for years. Prior to the pandemic, the state’s unemployment rate was below 4 percent – effectively full employment – and businesses struggled to hire for everything, from minimum wage, entry-level retail and hospitality work to experienced skilled trades and professionals with postsecondary degrees.

“Everyone is hiring, everyone needs people to work for them,” said Diana Roberge, a senior recruiter for Hannaford supermarkets, one of the biggest employers in Maine. “It is the state of our state,” Roberge added. “This is where we were in 2018, in 2019. I’ve been in this role for three years and it has always been hard recruiting in Maine.”

Steve Quatrucci, owner of Monte’s Fine Foods, works at a register on Friday. Derek Davis/Staff Photographer

The Department of Labor estimates Maine will lose almost 16,000 jobs by 2028, bringing the labor force to around 662,000 mostly because there are not enough young people to replace retiring workers. That small workforce decline, however, could lead to higher productivity, better wages and a growing economy, state economists said. A 10-year economic plan from Gov. Janet Mills spotlighted the labor force, aiming to bring 75,000 new workers into the state, increase pay by 10 percent and improve productivity.

Workers are also quitting jobs for new opportunities presented by rising wages and benefits, or reconsidering career paths and pursuing education and training. The U.S. Bureau of Labor Statistics reported in April that 4 million workers voluntarily left their jobs, the highest rate in two decades.

“To a certain extent, having a tighter labor market is a good thing,” said James Myall, a policy analyst at the Maine Center for Economic Policy. “Scheduling and wages have worked on the employer side for a long time, and they are not right now. This is an overdue correction after a long time of low wages and benefits.”

Monte’s Fine Foods, a specialty food market and restaurant on Washington Avenue in Portland, advertises retail positions for $21-$23 an hour, tips included. Even so, owner Steve Quatrucci said he might reduce hours at the business if he can’t find enough people.

“It seems like when COVID hit we lost of lot of people in the hospitality business that went on to other things,” Quatrucci said. “The pool for people in kitchen and retail work has shrunk. I’ve been in the community for many years; this is certainly the worst labor market I’ve ever seen. I think it is only going to get worse. Portland is becoming a very expensive town to live in.”

John Bennett, president of Oakhurst Dairy. in Portland. Derek Davis/Staff Photographer

At Oakhurst Dairy, scheduling can be as important as wages. In recent years the company has changed loading and delivery times in order to attract and keep drivers and warehouse staff lured by other jobs offering steady hours without early morning and weekend shifts. The Portland company has about a dozen openings, from a lab technician to production workers and commercial drivers, a profession in high demand everywhere.

“We have successfully gotten our delivery routes to a four-day workweek,” said Oakhurst President John Bennett. “It is hugely appealing to drivers to have weekends off. There is always going to be some amount of weekend work, but to limit it and have it be less part of a driver’s schedule is helpful.”

It is too early to say how long the employment boom will last or when wage gains will level out. Sheer demand and high unemployment, instead of an organized campaign, are boosting market conditions, which could make the changes short-lived, said Allegretto, the labor economist at the University of California, Berkeley.

“My thought is that it is going to be fleeting,” Allegretto said. “It is not a coordinated effort from unions; that means it is organic. That may be a good thing, but it might not be durable.”

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The View From Here: Making sense of the ‘Take this job and shove it’ economy

Press Herald 27 June, 2021 - 03:00am

Employers are trying to fill openings, but employees are quitting at record rates.

Americans are quitting their jobs at rates that haven’t been seen in decades.

In what some are calling the “Take this job and shove it” economy, about 4 million people quit in April alone, near double the number who resigned a year earlier.

The exodus has been especially noticeable in the retail sector, where 649,000 workers gave their notice, the largest exodus since 2000, when record-keeping on that statistic began.

This comes as employers are desperately trying hire enough people to take advantage of the post-COVID economic boom.

Of all the changes brought on by the pandemic, a powerful trend of people quitting their jobs was not one that I saw coming. But the change in people’s relationship to work is one that could have profound effects on how we live.

One way to look at it is that labor is a market, just like any other, and markets get disrupted.

For a while back in 2020, you had to know someone if you wanted to buy a roll of toilet paper. The shelves in the supermarkets were empty.

When the suppliers caught up with the demand for the kind of toilet paper that people use in their homes, as opposed to office buildings and schools, the shortage went away.

The pandemic shook up the labor market, putting millions of people out of work and increasing the demands on millions of others. There are 9.3 million open jobs, according the U.S. Department of Labor, and some of them are going to people who are already employed.

Disruptions shake out over time, and a perceived labor shortage might just go away as people find their place in the new economy.

But another way of looking at it is what we are seeing in employment is what happens when you treat people like toilet paper. Employers are begging workers to come back at something like the old wages and working conditions, and the workers are saying, “No, thanks.”

You have to remember what kind of jobs we’re talking about. When you think of “working-class” jobs, you might picture someone at a construction site or a manufacturing plant. But in Maine, there are more retail jobs than in both of those industries combined.

Retail workers made up 15 percent of the state’s workforce before the pandemic, but took home only 9 percent of the wages.

These are hard, physical jobs that often pay less than a living wage and have unpredictable hours. When business is slow, the companies shed workers. They shouldn’t be surprised that people are not hurrying back just because it suits the employer for them to come back.

“Many of these workers now have choices to make,” the two write. “More openings across the labor market create access to new opportunities at higher wages and benefit levels. The availability of job training provides workers with opportunities to gain new skills to improve their competitiveness and incomes.”

In other words, this will be good for the economy in the long run even if it’s creating chaos now.

The “take this job and shove it” phenomenon should put to rest the notion that the workforce problem is caused by a $300-a-week unemployment boost that about 10,000 Mainers are receiving, down from 99,000 on unemployment a year ago.

People who quit their jobs are not getting unemployment checks, and neither are the long-term unemployed people who are no longer counted as part of the labor force. Maine still has a lot of work to do to overcome the obstacles that keep working-age people out of work.

Maybe these resignations should be seen as a sign of hope.

People don’t quit their jobs when they are worried about the future – they cling to them, no matter how unhappy they may be.

The fact that millions of people are ready to reach out and try something different shows that they are optimistic that the future is going to be better than the past, and that is good news after a year in which so much of the news was bad.

But maybe the best way to interpret this information is to try not to interpret it too much before we see what happens.

“This is an extraordinarily unusual time,” Federal Reserve Chair Jerome Powell said recently. “And we really don’t have a template or any experience of a situation like this.”

Powell said we should be humble about our ability to understand the data, which sounds like good advice.

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