Summer Employment Forecast: Will the job market warm up again? | Feature

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By Craig Manning | May 14, 2022

If you look at northern Michigan’s calendar of events for the next four months, the easy conclusion is that things are back to how they were before COVID-19 froze the region’s tourism engine. From the Traverse City Film Festival to the Interlochen Arts Festival, big summer traditions come alive throughout the region.

But while local businesses and festival organizers are poised for a return to normalcy, a complete return to the last decade’s way of life may not be possible. Northern Michigan still has a big problem to solve: the labor shortage crisis.

National Challenge
The economic disruption related to the pandemic led to the highest unemployment rate since the Great Depression. According to the Bureau of Labor Statistics, the unemployment rate in April 2020 was 14.7 percent. For perspective, even at the worst time of the Great Recession, unemployment was at 10 percent.

The job market recovered during the second half of 2020 and into 2021, but many employers are still facing difficulties finding job candidates. For months, the common narrative was that larger-than-usual government unemployment benefits incentivized millions of Americans to stay home and delay their return to the workforce. But those unemployment programs, mostly funded by the CARES Act, ended last September, and more than eight months later, many employers are still struggling to find help.

Nationally, unemployment fell to 3.6 percent in March—close to historic lows reached in late 2019. At the same time, the strong economic recovery has created millions of new jobs. Taken together, these trends mean there aren’t enough workers to fill the jobs that are out there. In fact, Jerome Powell, chairman of the United States Federal Reserve, recently crunched the numbers and noted that there are currently 1.7+ job openings for every unemployed working-age American.

Perfect Storm
But while the entire US labor market is broken, northern Michigan has its own unique challenges that make this problem so dire. Just ask Matt McCauley, CEO of Networks Northwest.

Launched in 1974, Networks Northwest offers programs to the 10 lower northwest regions of Michigan, including Antrim, Benzie, Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau, Manistee, Missaukee, and Wexford. Many of the organization’s programs are aimed at helping businesses “start, grow, and survive in the northern Michigan area,” by navigating the challenges of talent recruitment and retention. Those challenges, McCauley said, were rarely more salient to local entrepreneurs than they are today.

“Our situation is very, very real,” McCauley told Fast. “And that’s for a variety of reasons, most notably the shifting demographics in northwestern Michigan. We have a one-two hit with regards to the labor shortage the last two years have brought us. First, we know that most of the labor shortage in all industries comes from people leaving the workforce—many of them Baby Boomers who are retiring. And second, because we’ve historically been and continue to be a retirement destination, older people come to the region with expectations for goods and services.”

The result, says McCauley, is a significant workforce gap. On the one hand, there is demand from the growing northern Michigan population for services that span a wide range of industries from restaurants and hospitality to new home construction to healthcare and senior care services. On the other hand, most industries are dealing with a mass exodus of Boomers from the workforce, a phenomenon referred to as the “Silver Tsunami”.

The cynical reading is that northern Michigan will always face a reckoning with an aging population someday. Data from the Area Agency on Aging of Northwest Michigan (AAA)—which serves the same 10-county area as Networks Northwest—shows that the Baby Boomer and Silent Generation cohorts make up 125,213 of the region’s 315,339 residents. Those numbers mean that nearly 40 percent of northwestern Michigan’s population will be over the age of 60 by 2025. In comparison, the region has just 108,657 residents belonging to the two generations (Generation X and Millennials) that currently drive America’s workforce. .

Meanwhile, McCauley admits that this particular workforce gap has been present and growing in northern Michigan “for several years now.” But by accelerating Boomer’s retirement rate—according to Bloombergmore than three million Americans have retired early because of COVID—and by pushing more people out of downtown and toward places like northern Michigan, the pandemic has increased the date on which the region will have to deal with its imbalanced population.

“[This labor gap] will likely be felt this summer,” McCauley said. “Because, that’s okay, this has the potential to be our first ‘normal summer’ since 2019. And there will be some pent-up demand associated with that.”

Shockwave
So where will locals or visitors see the impact of the region’s evolving workforce challenges this summer? McCauley points to the hospitality and tourism businesses—including restaurants, bars and retailers—as the first point of impact.

“At the very least, you’ll see limited hours of operation,” he predicts. “Places will open later and/or close earlier than they did before COVID. And that’s only based on the availability of labor. On the more extreme side, you’re likely to see some businesses close—not because the market doesn’t exist [for what they’re providing]but because they cannot find many critical workers to provide the level of service they want or need.”

The disruption in the business schedule had already occurred. One example is Amical, a long-running restaurant in downtown Traverse City that cut lunch hours during the pandemic and hasn’t returned them.

“It was on the radar,” Amical Owner Dave Denison said of restoring the restaurant’s lunch service. “Actually, we have developed what the lunch menu will look like, if everything goes well and we can attract even more staff members. But there are a lot of things that need to be taken care of first to improve staffing, and that includes predictable daycare and predictable school schedules.”

The difference between now and before the pandemic is that Denison and his staff put all their energy into the evening, rather than risk spreading themselves too thin by progressing beyond their current 4pm-9pm daily. Other Traverse City restaurants downtown take a similar “pick their place” approach, whether that means giving staff time to restock on Sundays and Mondays (Mama Lu’s and The Flying Noodle) or focusing specifically on lunch hours (The Towne Plaza) .

Of course, the restaurant’s lack of consistent service could become a problem if northern Michigan ends up experiencing its busiest tourism season in decades by far. Filmmaker Michael Moore, who is currently working on relaunching the Traverse City Film Festival for the first year since 2019, worries what might happen to a hotel business that is understaffed for events like his.

“At least right now, a lot of downtown restaurants don’t open until 5pm because they can’t get workers,” Moore said. “Well, how do you think the Traverse City Film Festival will go? We started showing the movie at 9am. There will be no place for breakfast? Or lunch? Obviously, there is a problem here, and this is a hurdle that we have to think about how to overcome.”

Moore cited the scarcity of affordable housing in northern Michigan as the biggest problem for building a vibrant young working class in the region.

McCauley concurs and points to half a dozen other industries that, such as hospitality and tourism, are being hit hard because workers can’t live in affordable areas. Construction and other skilled trades, childcare jobs, positions in health care (especially around senior care), and other roles, McCauley said, are difficult to fill now and may only become more challenging as demographic shifts and population growth continue to impact the region. .

No Silver Bullet
So, what is the solution to the northern Michigan labor crisis?

Beyond obvious answers, such as higher wages and better health care benefits, McCauley looks at three main strategies employers can employ today—housing, childcare, and job flexibility—that might help attract candidates to positions hard to fill. In the longer term, he expects other improvements—such as automation and an international workforce—to become more prevalent in northern Michigan communities as a way to keep the economy alive.

As for the immediate, all-encompassing, foolproof fix?

“I don’t think there’s a silver bullet,” McCauley said. “If there was, we would have used it already, because of this [labor crisis] not new. It’s a long-simmering problem, in large part, because of the greatest generational aging this country has ever seen. That crisis is something we should all pay attention to, and the solutions will vary, and we’re not going to fix it overnight.”

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