As vaccinations across Pennsylvania have increased, restrictions have been lifted and unemployment rates continue to drop, people are looking to get back to some kind of “normal.”
For many businesses, that sense of “normal” eludes them because they can’t find employees to fill their open positions. The shortage is hitting across many sectors, including those affected most by the restrictions due to COVID.
Labor shortages are causing some employers to restrict hours and turn away business — at a time they are trying to recover economically from the pandemic.
Guy Ciarrocchi, president and CEO of the Chester County Chamber of Business and Industry has been vocal in his belief that the $300 per week enhanced unemployment benefit is a main driver of the employee shortage issue. That $300 comes on top of the average $345 collected by people out of work in Pennsylvania. According to the Office of Unemployment Compensation, the weekly unemployment benefit equals about 50% of a claimant’s full-time weekly wage, up to a maximum of $583 per week, according to the agency's Rate and Amount of Benefits Chart.
In a recent interview, Ciarrocchi pointed to a national survey conducted by the U.S. Chamber of Commerce that found 52% of the respondents across the country that were unemployed said they are making as much or more collecting unemployment than they would if they were working.
A significant number of survey respondents “said it is causing them to not rush back to work either because they simply want to make more or they’re using this time to think about perhaps changing careers,” he added.
David Magrogan is the owner of Harvest Seasonal Grill & Wine Bar, which has eight locations, including Glen Mills, Newtown, North Wales and Lancaster. He is also CEO of the Magrogan Group.
Another Harvest Grill and Wine Bar location is in Delray Beach, Fla., where the enhanced unemployment benefits have already been dropped. That location, according to Magrogan, is 100% staffed.
“You can’t fault people for wanting to take time off if they can,” he said about those collecting unemployment in Pennsylvania. “It is up to the government to say, ‘Okay, we need to get back to producing.’”
Ciarrocchi said that not requiring unemployment claimants to prove they are looking for a job has been an added incentive for them not to work.
The requirement was suspended because of the pandemic, but was reinstated effective this week. Under the PA Department of Labor and Industry regulations, those receiving unemployment benefits must apply for two jobs and participate in one work search activity each week.
Governors in 26 states have already opted out of the federal unemployment benefits, setting dates when that enhanced benefit will expire. Pennsylvania has not, but some business leaders in the state are urging Gov. Wolf to take the step now — rather than wait until the benefit expires in September.
At the same time, there is a renewed call for an increase in the minimum wage and for employers to increase wages.
Unemployment rates continue to decrease across Pennsylvania. On Friday, the state Department of Labor and Industry announced the state's unemployment rate was 6.9% in June, down from 7% in May.
In May, the most recent official unemployment county-level data shows the unemployment rate was 6.3% in Berks County with 12,800 people unemployed; 3.9% in Chester County with 10,900 people unemployed; 5.9% in Delaware County with 17,000 people unemployed; and 4.7% in Montgomery County with 20,600 people unemployed, according to the PA Department of Labor and Industry.
IS THERE A LABOR SHORTAGE?
The short answer is "Yes."
Ciarrocchi said the “national problem is a Pennsylvania crisis.” He said in some areas of the state, the issue is putting some businesses “on the brink” of closing.
He added that limited service or long wait times at restaurants aren’t due to management not knowing how to operate a restaurant, it’s that “they're working with a staff that’s sometimes only a third or half of what it should be, because they simply can’t get the people back.”
And that, Ciarrocchi said, will ultimately harm the viability of the regional economy.
The good news, according to Dan Fogarty, director, workforce development for Berks County is that for those seeking work “there have never been so many jobs to go to,” and there is demand at multiple levels of organizations.
Fogarty and other workforce development officials across the region are hearing from frustrated employers about their needs and the opportunities available for workers.
In Berks County, Fogarty said the phones have been “ringing off the hook for months.”
“There is even greater intensity in those pleas for help from the employers now more than six months ago,” he said. “Despite pretty significant wage increases in many sectors, employers still aren’t drawing applicants.”
Jennifer Butler is executive director of MontcoWorks and deputy director for workforce development in Montgomery County. She said employers across sectors — health care, transportation, logistics, manufacturing and hospitality are searching for employees.
“We’re doing everything we can to connect them to folks who are looking for work,” she said.
“I am hearing they are struggling,” said Pat Bokovitz, director, Chester County Department of Community Development and Chester County Workforce Development Board. “It’s a real challenge.”
EFFECT ON LOCAL BUSINESSES
Several employers said the issue has affected their ability to do “business as usual.”
Scott Walsh is the owner of J. Scott Catering in Malvern, which also has three other catering brands: Queen of Hearts Catering, and two mobile concepts — WizWit Catering and Common Good Pizza and Tap.
He said across the company, he is 20% below the number of full-time employees he needs. The figures are worse for part-time employees. He is 75% below the number of part-time employees he needs.
“It’s horrible. We cannot take work — we’re turning away work. We can’t get people to staff events. We’re leaving dollars on the table,” Walsh said.
Domenick Savino is CEO and managing partner at The Drexelbrook Catering & Event Center in Drexel Hill, Delaware County. In addition to the catering facility, the property houses a Holiday Inn and Suites with a full service restaurant. Drexelbrook also provides catering for Franklin Commons in Phoenixville, and offers off-premise catering.
Savino said that prior to the pandemic his company was fully staffed. When COVID struck, large gatherings were the first target.
“In our catering company across the board, we went from 165 combined to a staff of 11,” he said, adding the company is in a “rebuilding process,” and is about 50-60% of where he would like to be with staffing heading into the fall.
“Like many of my colleagues we are turning away business. Where we used to be able to handle 5 to 7 events a day, we cut it down to 3,” he said. Savino added the company lost more than 75% of its business from 2019 to 2020.
Savino said three areas are currently the hardest to find candidates for: kitchen and cleaning crew, room set up and culinary prep.
Mary Keenan, co-owner of Pepper’s by Amedeo’s Restaurant in Upper Merion is having a similar experience.
Keenan and her partners took ownership of the restaurant just six weeks before COVID hit. She said so far they have been able to maintain their operating hours, but have been forced to turn people away.
How many customers Pepper’s can serve depends “100% on the staffing level,” Keenan said.
Customers don’t realize staffing is an issue as they expect the same level of service they had pre-pandemic.
Magrogan said each of the restaurants he owns is dealing with the issue to varying degrees. The Glen Mills restaurant, the group’s oldest location, is down 20% in its employees, while some locations are down 50%. In response, the restaurants were temporarily closed on Mondays for several weeks starting in mid-June, but have since resumed Monday operations. In addition, the restaurants are not serving lunch.
“I don’t see us opening for lunch until September or October,” Magrogan said, adding the company had about 800 employees and is now closer to about 450.
Glen-Gery is a brick manufacturing company that has been in business for more than 100 years. The company has a corporate headquarters in Wyomissing, and its flagship mid-Atlantic plant in Perry Township, Berks County.
Christy Piskar, manager, people and performance, said the company generally staffs up ahead of the summer — when it boosts production.
She couldn’t say how far off the company is in the number of employees, but acknowledges it is taking longer to fill positions.
“We’re seeing individuals having the choice. It’s almost a buyers’ market,” she said. “employees can pretty much dictate their journey.”
David Sinclair, is a field recruiter for First Student — a bus company that contracts with school districts to provide transportation for students. Sinclair is based in Colmar, Montgomery County, but First Student serves school districts across the region. The company's Colmar district transports 31,000 students each day. Nationally, First students transports 5 million students per day.
Sinclair said the company is recruiting employees for the upcoming school year. Because school districts are still working out their needs, he said the exact number of employees is still unknown.
However, he said the number of applicants is down.
“I might have a job fair and one or two people might show up instead of 10-20, so instead of one job fair I’m doing 10 to get the numbers where we need them,” he said.
WORKING THE PROBLEM
Four of the employers that spoke with MediaNews Group aren’t feeling the crunch to quite the same extent.
Travis Odom owns 12 Moe’s Southwest Grill restaurants in Pennsylvania, Delaware and Maryland — including two in Berks; one in Montgomery and one in Delaware counties.
Odom said all of his restaurants are fully staffed. He said in January and February he began to see there was an issue brewing with the labor force due to the stimulus being offered.
“I could see it coming. It was a gut reaction,” he added. Odom said he “went strong,” before everyone else did in trying to staff up. While he had not previously hired 15-year-olds, he made that change and began to include that age group in his candidate pool.
Odom three of his restaurants were closed for a number of months early in the pandemic. He added that when the restaurants reopened — those team members came back. He has been fully staffed since last July and August.
Meanwhile, when asked whether his restaurant — Wyomissing Restaurant and Bakery in Wyomissing was experiencing a shortage, owner Hamid Chaudhry responded, “What shortage?”
“I am not having any trouble,” he said. “I have one of the busiest restaurants in the county. My customers are good and tip well. My staff is happy.”
Chaudhry has owned the Wyomissing Family Restaurant for almost six years, and has been a business owner and investor in Berks County for the last 20 years. Several of his 24 full-time and 25 part-time employees have been with him for much of that time.
He said during the pandemic it was necessary to temporarily furlough some of his employees, but everyone who wanted to come back, came back, and there were enough applicants that he was quickly back up to full staff.
Pearl Somboonsong is director of development for Win Signature Restaurants, which operates five restaurants in Montgomery and Delaware counties including: The Blue Elephant in Pottstown, Mikado Thai Pepper in Ardmore, Azie on Main in Villanova, Azie Media in Media, and Teikoku in Newtown Square. The restaurant group will be opening its sixth restaurant in the September/October timeframe. The new restaurant will be another Blue Elephant, 110 N. Wayne Ave. in Wayne.
She said Pottstown’s Blue Elephant, which opened just six months before the pandemic struck, is fully staffed, did not have to lay off employees from the location and was able to retain its employees. Other restaurants in the chain, she said, “feel like we’re understaffed.”
“The issue now is people are ready to dine out, so we’re finding we have so many more customers and on top of that the takeout business has increased,” she said. “Even if we are fully staffed now, we have double the amount of takeout orders.” In addition, the restaurant group pivoted to provide more outdoor seating, expanding occupancy at some locations.
Chef Keith Taylor is the owner of Zachary’s BBQ & Soul. His catering company currently operates out of the Bridesburg section of Philadelphia, but he has a long-term interest in Norristown. He is the former owner of Zachary’s BBQ & Soul on Markley Street. He will be opening Zachary’s Commissary later this summer on Main Street in Norristown, he operates a stand at Elmwood Park Zoo, operates Soul of Cooking Kitchen Experience, and has been named to lead the kitchen at Five Saints Distilling in Norristown, which will also begin later this summer. He was recently asked to take over the food service for the Harrisburg Midtown Arts Center.
Taylor considers his company to be fully staffed, but said the number is “in motion.” Throughout the summer he will be staffing up at the zoo, the new commissary on Main Street in Norristown, at Five Saints Distillery and Arts Center.
Taylor said his model is a little bit different, with customer service teams — what he calls a CST — rather than servers. It’s a concept he developed 10 years ago. Customers place their orders, and when the order is ready, they are notified, and come up to the counter to pick up their food.
As part of that model — his employees are paid at least $15 per hour. Taylor said he hasn’t run into any big problems at any of the locations.