As Businesses Add Staff, Employers Must Compete For Labor

On sticky summer nights, a Blizzard from Dairy Queen is a favorite summer treat. But at the Brandon Avenue location, the only way to order one is via the drive-thru.

The fast-food restaurant doesn't have enough staff to allow customers to order at the counter or eat in the dining room. It's closed on Mondays for the same reason.

Owner Bob Mick said Dairy Queen is in its "peak season" and would normally have about 30 people working. But his crew is hovering around a dozen right now.

Few applications are coming in, candidates are blowing off interviews, applicants are being choosy about their schedules and on a few occasions new hires have lasted only a couple days.

Crew members typically start at minimum wage, which was increased in Virginia to $9.50 as of May 1, though Mick said there are opportunities for a raise after employees have proven themselves.

Mick said he hasn't done anything differently to try to attract new employees. Significantly increasing the starting wage wouldn't be feasible, he said, as profit margins have narrowed over the last several years and it would be difficult to survive the slow winter months. It would require him to raise prices, which Mick said he'd already had to do recently.

Mick isn't convinced the incentives he's seen other businesses offering would work anyway. He suggested that enhanced federal unemployment benefits - an extra $300 a week, set to expire in September - are to blame for his labor challenges.

Businesses across the country have been struggling to fill their open positions. With many industries, such as dining and tourism, ramping up staffing as the pandemic recedes, it creates an ideal situation for job seekers, who can afford to be more selective, but a headache for employers.

While many in the business community point to enhanced unemployment benefits as the reason people are reluctant to return to work, Mike Ellerbrock, a professor of agricultural and applied economics at Virginia Tech, said the hiring crunch is more likely caused by a combination of factors.

He pointed to remaining fears of COVID-19, especially with the delta variant; childcare issues, including concerns about sending unvaccinated children back to daycare while parents return to work; and the fact that people have grown accustomed to spending more time at home and the flexibility it provides.

Additionally, thousands of people still have outstanding claims with the Virginia Employment Commission.

Still, Ellerbrock anticipates a "significant shift in attitude" come fall - in addition to the end of increased unemployment benefits in September, children will be back to school and families will be returning from vacation.

Rather than a labor shortage, Ellerbrock describes the current hiring situation as an indication of changing views about work.

"I think staying at home for a year and a half, a lot of people have reassessed the value of their personal time at home and decided this is really meaningful to me, so I'm not going back to work at my old wage," he said. "I'm only going to go back to work if I can find a higher-paying job."

Job seekers are weighing what is referred to in economics as the opportunity cost of returning to work, he said.

"What am I giving up to go back to work 8 to 5 Monday through Friday? What's it really going to cost me on a personal scale versus how much am I going to get paid?" he said. "Opportunity costs - they are invisible but real."

Tom Barkin, president of the Federal Reserve Bank of Richmond, wrote in an essay this month about a key factor in the difficulty businesses are having in filling positions: an increase in the reservation wage, defined as the lowest wage an unemployed person is willing to accept for a new job.

He cited a survey that found that the average reservation wage for individuals making less than $60,000 and those without a college degree increased by more than $10,000 - up 26% - between March 2020 and March 2021, a jump "far in excess" of historical survey findings.

"If fewer jobs meet individuals' standards, then fewer people enter or remain in the workforce," Barkin wrote. "If there are fewer people in the workforce, employers must raise wages or lower their dependency on labor."

A struggle to fill positions

While it's good to see business returning to The Hotel Roanoke & Conference Center, that influx of activity requires more staff.

Michael Quonce, a spokesman for the hotel, said last week there were 18 open positions, with the greatest need in housekeeping and food and beverage operations. And there will likely be a need to bring on additional staff as more conferences and events are put on the calendar.

He said filling the positions has been "a bit of a struggle" in such a competitive atmosphere.

"Everybody seems to have a hiring sign out, so how do you stand above them?" Quonce said.

The Hotel Roanoke is relying on its reputation, opportunities for career growth, benefits and wages.

A $250 sign-on bonus has been offered to housekeeping and food and beverage operations staff, Quonce said, along with a referral bonus - $50 at hiring and another $50 if the new crew member stays on for 90 days.

Since the hotel is under the Hilton umbrella, its employees get discounted rates on hotels, a unique perk. Wages have also been a point of emphasis; Quonce said employees start at $11 to $18 an hour in the majority of housekeeping and food and beverage operations positions.

"We want to be as competitive as possible and offer an enticing package to all of our employees to attract the best talent to come work for us," he said.

Early in the year, Quonce said it was much harder to attract new employees, but as vaccines have become widely available and the fear of being infected is dissipating, interest has slowly risen.

Operations have not been significantly impacted by the reduced staff, but Quonce said the hotel would like to expand hours at its Regency Room restaurant and needs more people to do so.

"We're so excited to see the hotel industry coming back to life, but at the same time it goes into that whole hiring situation where we've got to get the team back in," he said.

'An employee market'

Though the majority of Mac and Bob's employees who were laid off when the restaurant closed during the pandemic have since returned, co-owner Bob Rotanz said it has been difficult to fill vacancies, which include not only servers but also a couple of cooks, as one recently left for a new job and another for training as a welder.

"It's definitely the most challenging time in my 40 years as far as getting people to apply for jobs," Rotanz said.

The Salem restaurant advertises openings on the job site Indeed. Rotanz said if 10 people respond, recently it's been common for only three or four to actually show up for an interview.

Mac and Bob's has about 100 employees and is only down about a half-dozen servers and a couple of cooks, so Rotanz said the hiring issues haven't really affected operations at the restaurant, which is back to its pre-COVID hours.

Rotanz said he believes enhanced unemployment benefits are a factor for some people and will be curious to see if the hiring situation improves when they expire.

The restaurant tries to offer competitive wages, Rotanz said. Pay in the kitchen varies by experience, but he said kitchen workers start at around $11 an hour and can go up to $16 an hour. Servers are paid the standard $2.13 an hour - federal minimum wage for tipped employees - plus tips. During a dinner shift, which is typically six hours, a server could make between $100 and $150 in tips on a weeknight and $140 to $200 on a weekend night, he said.

"It really is an employee market out there, so they're seeing what the wages are and seeing what the work environment is and going from there," Rotanz said.

Benefits and bonuses

Not all businesses are facing the same struggles.

Mast General Store in downtown Roanoke has recently hired a handful of part-time sales associates, and general manager Olivia King said it wasn't difficult to fill the positions.

Some of the candidates had shopped in the store and "really loved the atmosphere of the place and wanted to work here," King said, while others were motivated to apply by positive reviews from Mast employees.

Part-time sales associates generally start at minimum wage, King said, though it depends on experience. The retailer offers other benefits; King said part-time employees can earn paid time off and qualify for a 401(k) retirement program, and while they don't get health insurance, the company offers a wellness program that helps fill the gap and reimburses some medical expenses. And of course, there's an employee discount at the store.

King said those policies were already in place, but a referral bonus was recently increased. If the candidate is hired, the employee gets $100 and another $200 if the new staff member is still there after 90 days.

"Our wages aren't as high as some other retailers, to be honest, but we have a great benefit program and bonus programs," she said. "It's just a great company to work for, very community-oriented."