Labor shortfall challenges employers to make it all worthwhile

Like green shoots growing back after the eruption of Mt. St. Helens, signs of a post-pandemic economic rebound are springing up everywhere in greater Lansing.

Those signs usually say “Now Hiring.”

“The sheer numbers of jobs and internships flooding the market is mind boggling,” marveled Shelley Lowe, director of career services at Davenport College.

Job postings rocketed from 4,897 in August 2020 to 17,395 in August 2021 at MSU’s Career Services Network, according to spokeswoman Karin Hansen.

Employers are dangling all sorts of enticements, from higher pay to bonuses, flexible shifts and in-house training, but the labor shortage is still acute.

And it probably won’t ease up soon, according to Tim Daman, president and CEO of the Lansing Regional Chamber of Commerce. 

“Talking with employers, they don’t anticipate any bump in the next 45 to 60 days,” Daman said. “Some of them have told me that if they could see a bump by Thanksgiving they’d be surprised.” 

That’s because the employers have the biggest job of all. 

To bring in more workers, they’ll have to face a formidable blast of economic, social and psychological headwinds unleashed by the pandemic.

The problem has been building for decades, as jobs with a solid future, many of them union jobs, were gradually swamped by dead-end, low-paying jobs that leave workers unable to meet basic living expenses.

As if in spite, the pandemic flipped many of these beleaguered employees into the role of “essential workers” — the hospital orderlies, grocery store cashiers, delivery personnel and bus drivers who kept things going, in spite of health risks, compounded by daily abuse from angry mask haters and COVID deniers.

Going back to business as usual, with the same old pay and benefits, is hard to square with that experience.

“The minimum wage was artificially low, and we all know it wasn’t a living wage,” declared Keith Lambert, chief operating officer of the Lansing Economic Area Partnership, or LEAP.

It’s no wonder that many service sector workers who lost their jobs during the pandemic are going back to school, training for a better job, staying at home to take care of kids or aging parents, or simply seizing upon a rare opportunity to rethink life. 

In greater Lansing, opportunities for workers looking for greener pastures than Walmart or McDonald’s may never have been richer.

“The talent issue is not new,” Daman said. “Going back over the last five years, surveys of our members showed that talent and work force have been at the top of concerns for employers. It’s just been compounded by the challenges of COVID.”

Background figures

The current labor shortage began with the economic equivalent of a volcano.

“April of 2020 was the worst economic period in the history of the United States,” Lambert said. “It was hard to know where unemployment really was. A lot of people were detached from their employers and they didn’t really know if they had a job or not. It was the craziest spike we’ve ever seen.”

A year and a half later, Lambert said, the economy is still “definitely in uncharted territory.”

The unemployment rate in the tricounty region of Ingham, Clinton and Eaton counties stood at 5.31 in July 2021, down from 7.41 percent in 2020, but still above the pre-pandemic rate of 3.33 percent in 2019, according to data from the Bureau of Labor Statistics and other agencies.

Unemployment rates have declined in Michigan — and Greater Lansing — for eight straight months. Last month, the state’s unemployment rate was down to 4.7%, well below the national average and the lowest rate tracked since last March, according to state economic officials.

Michigan’s economy also grew by 7.6% in the first quarter of 2021 — the best in the Midwest. The state also continues to lead the country in automotive manufacturing.

If Michigan is leading the Midwest in economic growth, greater Lansing is leading the nation by another measure: its proportion of pandemic-resistant “durable jobs.”

“Durable jobs are in fields such as government, higher education and financial services, including the insurance industry, and that’s a large part of our Lansing economy,” Lambert said.

The Lansing metro area ranks first in the nation in durable jobs, according to a May 2020 report by Yardi Matrix, a global real estate market data firm.

State capitals, especially those with a major university, are most abundant in such jobs. The report says that 44 percent of Lansing’s jobs are in government, finance or professional and technical services. (Washington, D.C., came in second, at about 42 percent, followed by Sacramento, San Francisco and Austin, Texas, all under 35 percent.)

If your position is durable, you are fortunate in more ways than one.

“You have a strong job, you’re a little bit higher educated on average, you’re earning a higher income and you’re probably more likely to be able to work at home,” Lambert said.

The overall jobs market is so competitive that even many durable jobs are going begging. Daman said the rise of remote work is complicating the picture, as health care units, financial services and insurance firms struggle to secure I.T. personnel.

“Those are the folks that probably have the capability of doing 100 percent of their work remotely,” Daman said. “The ability for an I.T. professional living in Lansing to work for a company in Austin, Texas, Silicon Valley or Boston is greater than it’s ever been.” 

But Lansing’s economy, like the nation’s, tells a tale of two cities: the durable and the vulnerable.

“The jobs that were most heavily displaced and affected by the pandemic were lower income, lower skill set,” Lambert said. “The people affected, in general, have less savings and are less able to weather an economic shock.”

In Ingham, Clinton and Eaton counties, the spring 2020 shutdowns wiped out about half of the 11,000 jobs in the hospitality industry, which includes restaurants, bars, hotels and transportation, according to Julie Pingston, president of the Greater Lansing Convention and Visitors’ Bureau.

It’s uncertain how many of these workers will come back, or how soon. Evidence is mounting that many of them won’t.

Dropping out

Hidden underneath the current jobs surge is a strangely persistent drain at the bottom of the labor pool.

The labor force participation rate — the percentage of working-age Americans who were either employed or looking for work — dipped sharply when the pandemic hit in spring 2020, from 63.3 percent before the pandemic to nearly 60 percent, the most drastic drop since 1948. As soon as August 2020, the rate rebounded to 61.7 percent, but it has been stubbornly stuck since then, coming in at 61.7 again in August 2021, according to the federal Bureau of Labor Statistics.

Many business leaders trace the labor shortfall to the availability of enhanced unemployment benefits, which lapsed Sept. 4.

“We can debate about this, but with the unemployment benefits, people were incentivized to stay home in some instances,” Daman said. 

But Davenport’s Shelley Lowe said there are “many more layers to the onion.”

“People are staying out of the workforce for a broad number of reasons,” Lowe said. “It’s not just, ‘I’m collecting unemployment right now and I don’t want to work.’”

At Capital Area Michigan Works!, CEO Carrie Rosingana has received “a lot of reports about the number of women who have dropped out of the work force, with schools being virtual and lack of availability of childcare.”

Lowe described the situation this way: “People have simply left because they have other responsibilities, and in their mind, the stars all lined up and they should just stay home, and that’s mostly the female side of the equation,” she said. “They’re taking care of kids, they’re taking care of parents.”

Hansen is finding that for many MSU students, work is coming in “second, third or fourth” after other priorities, as they make the adjustment to the return to in-person classes and campus life.

Each semester, Lowe gets a sheaf of data on graduates who are not working, “whether they cannot find a job or for whatever reason.” She follows up on the survey with phone calls to each respondent. 

“Usually, I know there’s a reason — ‘I’m not getting interviews,’ ‘I don’t know where to start,’” she said. “But that’s not what we’re hearing right now.”

Some responses confirm the trend toward a mass exodus from low-paying service jobs to career tracks. 

“We’re seeing more people getting a higher degree or going into a completely different area, but they’re not working while they’re doing it,” she said. 

But Lowe is also hearing from graduates who are re-evaluating their lives. 

“For the last year, I’ve been hearing a wider range of reasons, from ‘I’m just not motivated to go find a job right now’ or ‘I just don’t want a job right now’ to ‘I’m rethinking what I want to do,’” Lowe said.

She has found that many of them, working or not, are “weighing their effect on the global environment or the environment around them.” Many have told her they are holding out for environmentally conscious employers or companies in which to invest.

“The pandemic made everyone reflect on their life, their trajectory, what they’re doing,” Lambert said. “It was a reason for a lot of people to back to school. Why go back to that job making 10 bucks an hour?”

Moving up

The autumn influx of students would, under normal circumstances, help fill the thousands of unfilled restaurant, retail and service jobs in the area.

But from what MSU Career Service’s Karin Hansen is seeing, don’t hold your breath.

“Because there are so many opportunities available, they are holding out for opportunities that align with their career goals, as opposed to taking a position that just pays the bills,” Hansen said.

She’s seeing more students than ever choose unpaid internships, entry-level positions in the type of firm they hope to work for someday, or jobs that train them in skills they will someday need, over slinging hash or serving coffee for near-minimum wage.

Rosingana is seeing the same trend at Michigan Works.

“With safety as a concern, we’re seeing a lot of people looking for other training opportunities and skill sets they can transfer from their work in hospitality, because there are a lot of job opportunities right now.”

The tri-county area is not lacking in opportunities for such workers. McKesson, a major pharmaceutical distributor, held a series of job fairs this summer and hired 100 workers for its new complex in Holt in the last month alone.

In 2020 and 2021, MWC Glanbia hired over 200 people, despite the pandemic, to work at its giant new cheese and whey manufacturing center in St. Johns.

Shyft Group, a builder of commercial fleet and specialty vehicles, hired over 500 people from March to June for its manufacturing campus in Charlotte, at starting rates ranging from $15 to $22 an hour. (Demand for Shyft’s output was turbocharged by the need for more parcel delivery vehicles.)

“These are examples where someone with minimal education and experience but is hungry and willing to maybe get a six-month certification at LCC — they can access some of these jobs that have more clear upward mobility than a job at a restaurant,” Lambert said.

Hansen has taken a roller coaster ride since she came to MSU in 2008, at the onset of the Great Recession, when the job market is “the opposite of now,” she said.

This fall, she is in a position to offer students and employers a set of opportunities unprecedented in her tenure.

Employers are pouring extra syrup and butter, even on entry level service jobs. “The hourly wages of service jobs have increased,” Hansen said. “I just got a call from Wal-Mart yesterday, talking about their wage increases and asking her what they could do to attract more talent from campus.”

Starbucks is raising its entry-level wage to $12 to $15 an hour this fall, part of a plan to reach a minimum wage of $15 for all workers in two to three years.

On Hansen’s desk is a flier from a local pizza place offering $20 an hour in combined wages and tips, with a guarantee to make up the difference if the tips don’t come through.

But Hansen is finding that may students are passing up such blandishments for something more rewarding.

In fall 2021, MSU has held many more career events, and marketed them more heavily, than it ever has.

“To have 37 career fairs in one fall semester is just unheard of,” Hansen said. In contrast to mass suit-and-tie cattle calls of the past, this fall’s events are targeted to specific fields such as marketing, sales, packaging and so on. It’s more work for the employers, but Hansen said targeted communication pays off for both students and employers.

“It makes it feel like a very special jobs posting — a personalized message, almost like they’re being invited to apply,” she said.

Employers are also offering more flexibility. Last week, Hansen fielded a call from Manitou Pontoon Boats, a manufacturer based in northwest Lansing, touting flexible schedules and night shifts to accommodate student schedules.

“The service industry is competing against higher wage jobs like that, that students may not have been able to consider in the past, because it was eight-hour day shifts with no flexibility,” Hansen said.

Many mid-Michigan employers are launching or expanding in-house training to “capture” workers who want to move out of their old service sector jobs.

There’s financial help from the state for such firms. Capital Area Michigan Works! handles the Going Pro Talent Fund, which helps large and small firms pay for in-house training that leads to “a credential for a skill that is transferable and recognized by industry.”

Between 2014 and 2021, the fund made over 4,100 awards averaging about $31,000, mostly to companies with fewer than 100 employees.

The fund helped 19 companies from the tri-county area in fiscal year 2021 with grants ranging from $5,000 (for Capital Steel & Wire) to $150,000 (for automotive seat manufacturer Bridgewater Interiors in Lansing).

Michigan Works’ Rosingana encourages employers to volunteer information about company culture, especially COVID practices, to “help calm some of the nerves of job seekers right now.”

“Safety is still at the forefront for job seekers looking to go back to work,” Rosingana said. “It’s not just service employees who can’t work remotely, we’re seeing it and hearing it across industry sectors. People who work in an office setting want to see what the safety protocols will look like.”

Rosingana urges short-staffed employers to adopt a “people first model” and trumpet their niceness on social media and other platforms.

“Job seekers want to know they’re being taken care of,” she said.

Experts like to say that the jobs market is heading toward a “new equilibrium,” but nobody knows just when, or how, the curves of labor supply and demand will meet. “I wish there were a silver bullet that could solve the issue, but I don’t see that,” Daman said. “Employers are going to have to be innovative and probably doing things they never thought they would be doing, pre-COVID.”

Support City Pulse  -  Donate Today!