Labor shortages end when wages rise, say some local businesses

Server Sophie Davis prepares drinks for her customers at Cantina Loca in Alpharetta, one the restaurants owned by the Will Restaurants Investment Group. The owner, Brian Will, has raised wages to attract and retain workers. He says more motivated employees also provide better service, (Alyssa Pointer / Alyssa.Pointer@ajc.com)
Server Sophie Davis prepares drinks for her customers at Cantina Loca in Alpharetta, one the restaurants owned by the Will Restaurants Investment Group. The owner, Brian Will, has raised wages to attract and retain workers. He says more motivated employees also provide better service, (Alyssa Pointer / Alyssa.Pointer@ajc.com)

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

As his six restaurants started ramping up for a post-pandemic world, Brian Will was struggling to find employees, so he went with the classic economics response for hard-to-find things.

He paid more.

Will raised wages for jobs like dishwasher and hostess from $8 or $10 an hour to $15. And he bumped up pay for those on his staff already at that level.

“We started to get a better quality of applicants,” he said. “And the employees we already had, the ones that we gave raises to, they stepped up their game.”

The post-pandemic recovery, unlike any other, has produced a shortage of workers from poultry plants to hospitals to restaurants. Millions of jobs were cut early in the pandemic, mostly low-wage, service positions. Now as Americans get vaccinated, consumers start to travel and dine, businesses are racing to rehire.

States like Georgia have used a stick: cutting unemployment benefits to push workers off the sideline. A growing number of local companies are using a carrot: raising wages to lure people back to jobs.

The reasons for worker-hesitancy are varied — lack of childcare, COVID fears, unpleasant work conditions — but money is part of the equation: Federal jobless subsidies combine with Georgia’s program to pay up to $665 a week, the equivalent of $16.63 an hour.

That is more than a lot of people make. Georgia’s Department of Labor says 80% receiving jobless benefits previously made $20,000 a year or less, or just under $10 an hour.

A 2019 Brookings study calculated that median earnings in metro Atlanta were $18.12 an hour. But about one-fifth of workers made $10.09 an hour or less, below the roughly $12.74-an-hour wage that sets the poverty line for a family of four.

“It does give people a little wiggle room not to take a job that has really low wages and is not safe,” said Heidi Shierholz, former chief economist for the U.S. Department of Labor, and now senior economist at the Economic Policy Institute.

Gov. Brian Kemp, responding to pressure from Georgia business groups, announced earlier this month that federal subsidies would be cut off June 26. That would cut $300 a week from about 70,000 jobless Georgians, and end all payments to about 220,000 others.

The move was justified, they said, because there are so many job openings — about 240,000 on the state labor department’s site.

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It is hard to say how many businesses are fighting the shortage with higher pay. Government wage data lags by months. But some high-profile retailers and fast-food employers nationally have announced higher pay, including Target, Starbucks, Costco, Walmart, Chipotle and McDonalds. And local examples are piling up.

Health care workers are in high demand as elective surgery, routine check-ups and home health visits pick up again.

In April, Piedmont Healthcare announced plans to hire a few hundred nurses and respiratory therapists, offering hiring bonuses of up to $30,000 for each person, based on expertise, experience and staying on the job for a specified time. So far this month, Piedmont has seen applications for those jobs rise by 20%, a spokesman said.

Higher pay, bonuses, flexible schedules and other perks are widespread as a way to fill positions, said Judi Tompkins, owner of ATC Healthcare Services of Georgia, which places about 400 people a week in health care jobs. “In health care, the stick doesn’t work,” she said. “It never has.”

Most intense is the demand for certified nursing assistants who work in nursing homes, home health care and COVID testing, she said. “Pre-pandemic, a CNA was making $10 or $11 an hour. Now a CNA won’t even talk to you unless it’s $16.”

Cantina Loca head chef Dustin Brand works in the kitchen of the restaurant in Alpharetta, Monday, May 17, 2021. (Alyssa Pointer / Alyssa.Pointer@ajc.com)
Cantina Loca head chef Dustin Brand works in the kitchen of the restaurant in Alpharetta, Monday, May 17, 2021. (Alyssa Pointer / Alyssa.Pointer@ajc.com)

Credit: Alyssa Pointer/Alyssa.Pointer@ajc.com

Credit: Alyssa Pointer/Alyssa.Pointer@ajc.com

Restaurants, whose business was devastated during the shutdowns, are scrambling to be ready for the return of customers.

Your Pie, an Alpharetta-based chain of pizza places with about 750 employees, hires workers without experience, but has struggled to fill open slots, according to Chief Executive Dave McDougall. Starting pay at Your Pie used to be $7.25 an hour, but is now typically $8 to $12 plus several dollars an hour in tips.

Other sectors too are trying to climb back and keep up.

In logistics and manufacturing, federal unemployment benefits have effectively raised the minimum wage, said Kim Wallace, executive vice president at Hire Dynamics, a Duluth-based staffing company.

Pre-pandemic, forklift drivers made about $14-$15 an hour. Now they command about $3-an-hour more, she said.

Call center workers, who were making $12-$13 an hour, are getting at least $2-an-hour more. Companies trying to lowball wages, like after past recessions, cannot fill positions, Wallace said. “It is a war for talent.”

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For businesses, it’s a dilemma, said Sheryl LaPlace, a senior human resources specialist for Insperity, which helps companies with their HR. Competition for workers can raise costs, but quickly attracting a better staff can give a business a head start as the economy rebounds.

“People feel, ‘If I’m going to take the risks, I should be compensated for it,” she said. “So, companies that take the old school approach to management may have trouble finding the right employees.”

But there’s a limit to what a small business can pay, said Pepe Fundora, owner of the Cork and Glass wine shop in Alpharetta. He starts off his five workers at $15 an hour, and can offer camaraderie, flexibility and financial support for courses toward sommelier certification.

“You have to make sure there’s money in the bank to pay your staff,” Fundora said.

Jamie Oden bought an Amici restaurant franchise in Fayetteville which she plans to open later this month. To be fully staffed, she needs about 25 people. She has fewer than 10.

“We have been struggling to find help,” she said. “No one would even apply.”

She did increase pay by $2 an hour for some cooks and food prep workers. But her business plan called for paying dishwashers $10 or $12 an hour, and at that wage, she couldn’t fill those jobs. “I had people who applied and said they just wouldn’t work for less than $16 an hour.”

Rising wages, along with inflation in food and drinks, threatens the assumptions in her business plan, she said. “We have to be affordable for people to come in. Raising our prices is not really an option.”

Will is gambling that higher wages will pay off at his restaurants, which include Cantina Loca in Alpharetta and Sugar Hill.

“We’ll have to raise prices a little, but we’ll also be raising the level of service we give,” he said. “Maybe you need to become a better business and then you can afford it. Sales solve all problems.”

Growth in U.S. job openings compared with February 2020

Manufacturing: 76%

Wholesale trade: 38%

Logging and mining: 29%

Leisure and hospitality: 28%

Retail: 20%

Construction: 14%

Education and health services: 13%

Transportation, warehousing: 8%

Professional and Business services: 5%

Source: Indeed

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