Job opportunities are growing nationwide, a sign that businesses are coming back after 2020 shutdowns. Yet there’s been concern about a shortage of workers, particularly in service, construction and retail industries. In fact, 62% of respondents to Springfield Business Journal’s 2021 Economic Growth Survey said access to skilled workers worsened last year. In addition, a skilled workforce and talent acquisition/retention ranked second and third, respectively, among most important issues businesses will face over the next five years. Roughly half of survey respondents said they plan to increase employees in the coming year.
“There’s help wanted signs everywhere with higher and higher rates and sign-up bonuses,” says Titus Williams, president of Prosperiti Partners LLC. “I think what they’re trying to do is get people to leave the house and come to work.”
He believes the workforce shortage is one way the influx of dollars to consumers and small businesses through COVID-19-related government programs may have had negative impact on the economy.
Williams says it’s important to examine both positive and negative ramifications of stimulus checks, larger than usual unemployment payments, and even the Paycheck Protection Program and Economic Injury Disaster loans to small businesses.
“We don’t really have a good understanding of what it’s going to do long-term – what’s going to happen with that kind of influx of cash into the marketplace,” he says.
Regarding workforce shortages, Williams suggests it was a mistake to offer a second round of PPP without cutting off enhanced unemployment payments which reduced incentive to work.
“If they would have done that,” he says, “I believe you wouldn’t see (help wanted) signs in the streets.”
Even as assistance ends and people return to the work they know, Williams predicts it could lead to disgruntlement.
“My pessimistic view is they aren’t going to be satisfied in those positions,” he says. “So, I believe we’re going to get in a period of time where you see a lot of turnover.”
Sally Payne, interim director of Workforce Development for the city of Springfield, says the Missouri Job Center hosted a hiring event three days before expanded unemployment benefits were ended. Attendance was roughly double those attending a previous event, though not back to pre-pandemic numbers. She says the shortage concern was widely discussed at a national workforce conference she recently attended.
“While I understand that those expanded unemployment benefits have probably had some influence on people staying home, I think there’s so many other things we need to start considering,” she says.
One of those factors: Retiring baby boomers. Roughly twice as many boomers retired in 2020 as did in 2019, according to the Pew Research Center. The next two generations aren’t big enough to fill the gaps, Payne says, so that alone creates a labor shortage. Additionally, more people are looking for remote, flexible higher-paying careers, which don’t include service industries. And there are still child care issues and fear of the disease.
“It’s very hard to pin it down to one root cause, because there’s too many variables and factors playing in my opinion,” Payne says.
She also says turnover is a concern to businesses. That’s why many are now offering retention bonuses in addition to higher wages and signing bonuses.
Williams says there are positive results from the cash influx too. The Coronavirus Aid, Recovery and Economic Security Act was very much needed at the time, allowing many businesses to stay open and keep people employed. And for some working class, the CARES Act was a boon.
“These people potentially made more money in the last year than they ever would have made in the past,” Williams says.
That ensured more disposable income for necessities. Plus, for some, stimulus money paired with growing bank accounts while staying home provided the means to buy luxury items, pay for home projects or even buy a house.
Another positive, Williams notes: Money spent locally feeds our economy. Springfield’s year-to-date sales tax revenue was up 9.8% over budget through June 2021, and up 7.62% compared with June 2020 sales. Spending doesn’t appear to be slowing. In June, the National Retail Federation projected retail sales in 2021 would grow between 10.5% and 13.5% to more than $4.44 trillion. Online and nonstore sales alone are soaring with growth projected 18% to 23%, according to the NRF. Locally, while 68% of Economic Growth Survey respondents said the pandemic had negatively impacted their business in the last year, nearly 61% say their company can survive the current climate with cash on hand indefinitely.
Still, the influx of dollars could ultimately contribute to inflation, Williams says. In a May Bureau of Labor Statistics report, the Consumer Price Index for all items increased 5% before seasonal adjustment – the largest 12-month increase since August 2008. Williams says it’s because some businesses and industries didn’t suffer – and in fact thrived. As the pandemic slowed supply chains, Williams says, demand remained stable or increased. That caused a spike in prices for things like construction materials and food.
Those costs are passed to consumers, which ultimately could hurt the working class, he says. The same could happen to small-business owners who are uncertain about increasing prices to balance increased costs of doing business.
“You’re going to have to be pretty good at what you do to understand how to keep up with the market and make sure that you can handle it,” he says.
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