I often post about the complexity of the issues confronting us these days, but I will readily concede that everything isn’t complicated. In fact, some things turn out to be relatively simple.
Case in point: As the pandemic has eased, thanks to vaccinations, and Americans have begun returning to the restaurants and bars we all missed during our year of isolation, the media has been full of stories detailing the difficulty those establishments are having attracting staff. Politicians and pundits have “explained” the problem via their respective biases: Republicans, for example, have insisted that the reluctance to return to these jobs is a result of the unimaginable generosity represented by those $300 unemployment checks.
Several Red states, including Indiana, have rushed to terminate those payments–essentially, calculating that further impoverishing the unemployed will force workers back into the low-wage labor market.
A number of economists have suggested that blaming the problem on unemployment payments, as satisfying as Republicans may find that explanation, is incorrect, and emerging data–that pesky thing we call “evidence”–would seem to confirm that conclusion. A number of media outlets, including the Washington Post have reported that there is even a relatively simple “fix” for the problem: better pay.
The owners of Klavon’s Ice Cream Parlor had hit a wall.
For months, the 98-year-old confectionary in Pittsburgh couldn’t find applicants for the open positions it needed to fill ahead of warmer weather and, hopefully, sunnier times for the business after a rough year.
The job posting for scoopers — $7.25 an hour plus tips — did not produce a single application between January and March. So owner Jacob Hanchar decided to more than double the starting wage to $15 an hour, plus tips, “just to see what would happen.”
The shop was suddenly flooded with applications. More than 1,000 piled in over the course of a week.
When a variety of media outlets reported on Klavon’s experience, it prompted a number other business to emulate the tactic–and guess what?! That clever ploy worked for them, too!
As the Post story noted, across the country, businesses haven’t been facing a scarcity of workers — they’ve been facing a scarcity of workers interested in applying for low-wage positions.
The current shortage of workers isn’t solely a function of low wages, of course–the problem isn’t quite that simple. There are a number of other elements exacerbating the problem, as the article pointed out.
Republicans have blamed enhanced unemployment benefits for the shortage; Democrats and most labor economists say the issue is the result of a complicated mix of factors, including many schools having yet to fully reopen, lingering concerns about workplace safety and other ways the workforce has shifted during the pandemic.
The experience of 12 business operators interviewed by The Washington Post who raised their minimum wage in the last year points to another element of the equation: the central role that pay — specifically a $15-an-hour minimum starting wage — plays in attracting workers right now….
Enrique Lopezlira, a labor economist at the University of California at Berkeley and an expert on the low-wage workforce, said the stories were a sign, albeit anecdotal, that the market was functioning as it should in the face of excessive demand for workers.
“The more employers improve the quality of the jobs and the more they think of workers as an asset that needs to be maximized, the better they’re going to be able to find and retain workers long term,” he said.
Several individual stories recounted in the Post article bear that out.
Many of the business operators interviewed said that the decision to raise their employees’ starting wage was not motivated primarily by altruism or a desire to do right: It just made good business sense.
They said wage increases would help attract stronger candidates, reduce turnover and elevate company morale and culture — important for customer-facing businesses such as restaurants.
“We’re going to see savings in retention and turnover, which is so expensive,” said Nicole Marquis, the founder and chief executive of HipCityVeg, a group of fast-casual vegan eateries with locations in Philadelphia and D.C. that recently announced a $15 starting wage. “And this is going to help with recruiting, which will help with our culture — and is really what drives profit at the end of the day and creates a long-lasting brand.”
Some things aren’t that complicated…