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Summer employment forecast: will the labor market heat up? | Features

By Craig Manning | May 14, 2022

If you look at a Northern Michigan calendar of events for the next four months, the easy conclusion is that things are going back to how they were before COVID-19 put the region’s tourism machine on ice. From the Traverse City Film Festival to the Interlochen Arts Festival, great summer traditions are coming to life across the region.

But while local businesses and festival organizers are ready to get back to normal, a full return to the way of life of the past decade might not be possible. Northern Michigan still has a big problem to solve: a total labor shortage crisis.

A national challenge
Pandemic-related economic disruptions have led to the highest unemployment rates since the Great Depression. According to the Bureau of Labor Statistics, the unemployment rate in April 2020 was 14.7%. For perspective, even at the worst of the Great Recession, unemployment peaked at 10%.

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

Nationally, unemployment fell to 3.6% in March, near historic lows it reached in late 2019. At the same time, a robust economic recovery has created millions of new jobs. Taken together, these trends mean that there are not enough workers to fill the jobs that do exist. In fact, Jerome Powell, Chairman of the United States Federal Reserve, recently analyzed the numbers and noted that there are currently more than 1.7 job openings for every unemployed American of working age.

A perfect storm
But while the entire US labor market is out of whack, Northern Michigan has its own unique challenges that make the problem particularly serious. Ask Matt McCauley, CEO of Networks Northwest.

Launched in 1974, Networks Northwest offers a variety of programming in the 10-county region of lower Northwest Michigan, which includes Antrim, Benzie, Charlevoix, Emmet, Grand Traverse, Kalkaska, Leelanau, Manistee, Missaukee and Wexford. Many of the organization’s programs aim to help businesses “start, grow, and stay in the Northern Michigan region” by addressing the challenges of recruiting and retaining talent. These challenges, says McCauley, have rarely been more pronounced for local employers than they are today.

“Our situation is very, very real,” McCauley told the To express. “And that’s for a variety of reasons, the main one being the changing demographics in northwest Michigan. We have doubled the labor shortages that the last two years have brought us. First, we know that a large portion of labor shortages in all industries stem from people leaving the workforce, many of whom are retiring baby boomers. And second, because we have always been and continue to be a retirement destination, seniors come to the area expecting goods and services.

The result, says McCauley, is a significant labor shortage. On the one hand, there is a demand from Northern Michigan’s growing population for services that span a variety of industries from restaurants and hospitality to building new homes to health care and aged care services. On the other hand, most industries are facing a massive exodus of baby boomers from the workforce, a phenomenon called “the money tsunami”.

The cynical read is that Northern Michigan was always going to one day deal with its aging population. Data from the Area Agency on Aging of Northwest Michigan (AAA) — which serves the same 10-county region as Networks Northwest — indicates that members of the Baby Boomer and Silent Generation cohorts make up 125,213 of the region’s 315,339 residents. These numbers mean that nearly 40% of Northwest Michigan residents will be over the age of 60 by 2025. By comparison, the region has just 108,657 residents who belong to the two generations (Gen X and Millennials) who currently lead the American workforce.

For his part, McCauley acknowledges that this particular labor shortage has been present and growing in Northern Michigan “for several years now.” But by accelerating the retirement rates of baby boomers, according to Bloombergmore than three million Americans have taken early retirement because of COVID — and by driving more people out of urban epicentres and into places like northern Michigan, the pandemic has brought forward the date the region will have to deal with its unbalanced population.

“[This labor gap] will likely be especially felt this summer,” McCauley said. “Because knock on wood, this will potentially be our first ‘normal summer’ since 2019. And there will be pent-up demand associated with that.”

shock waves
So where will locals or visitors notice the impacts of growing labor challenges in the region this summer? McCauley says hospitality and tourism businesses, including restaurants, bars and retailers, are the first points of impact.

“At a minimum, you’re going to see limited opening hours,” he predicts. “Venues are going to open later and/or close earlier than they did pre-COVID. And that’s just based on labor availability. On the more extreme side, you’re likely to see some businesses close, not because the market isn’t there. [for what they’re providing]but because they are simply unable to find a critical mass of workers to provide the level of service desired or needed.

These disruptions to business hours are already happening. One example is Friendly, a longtime restaurant in downtown Traverse City that cut lunch from its hours during the pandemic and has yet to bring it back.

“It’s on the radar,” Friendly owner Dave Denison said of restoring the restaurant’s lunch service. “In fact, we have developed what a lunchtime menu would be, if things settle down and we can attract more members of staff again. But there are a lot of things that need to be taken care of first when securing staff, and that includes predictable childcare and predictable school hours.

The difference between now and before the pandemic is that Denison and his staff are putting all of their energy into the night, rather than risking spreading themselves too thin by stretching beyond their current daily hours of 4-9 p.m. Other restaurants in downtown Traverse City are taking a similar “pick their seats” approach, whether it’s giving staff a break on Sundays and Mondays (Mama Lu’s and The Flying Noodle) or focus specifically on lunch time (The Towne Plaza).

Of course, less consistent restaurant service could be a problem if Northern Michigan ends up having its busiest tourist season of the decade so far. Filmmaker Michael Moore, who is currently working to relaunch the Traverse City Film Festival for its first year since 2019, worries what understaffed hospitality businesses could mean for events like his.

“At least right now, a lot of downtown restaurants don’t open until 5 p.m. because they can’t find workers,” Moore says. “Well, how do you think the Traverse City Film Festival is going to go? We start showing movies at 9:00 a.m. Will there be no room for breakfast? Or lunch? Obviously, there’s a problem here, and it’s an obstacle that we have to figure out how to overcome.

Moore alludes to the shortage of affordable housing in Northern Michigan as perhaps the biggest problem for building a young and vibrant working class in the region.

McCauley agrees and points to another half-dozen industries that, along with hospitality and tourism, are being hit hard because workers cannot live in the area affordably. Construction and other skilled trades, childcare jobs, positions in health care (particularly in elder care) and other roles, according to McCauley, are hard to fill right now and could become more challenging as demographic shifts and population growth continue to impact the region.

No quick fix
So what’s the solution to the labor crisis in Northern Michigan?

Beyond the obvious answers, like higher wages and better health care benefits, McCauley sees three main strategies employers can implement right now — housing, childcare, and job flexibility. jobs – which could help attract candidates to hard-to-fill positions. Longer term, he predicts that other solutions, such as automation and an international workforce, will become more common in northern Michigan communities to keep the economy going.

As for an immediate, global and infallible solution?

“There is, in my view, no silver bullet,” McCauley says. “If there was, we would have already used it, because what [labor crisis] is not new. It’s a long-simmering problem that is, in large measure, due to the aging of the largest generation this country has ever known. This crisis is something we all need to pay attention to, and the solution is going to be multifaceted, and we’re not going to fix it overnight. »

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