Businesses across Northwest Indiana have been suffering from labor shortages amid low unemployment, a declining labor participation rate and the ongoing coronavirus pandemic.
Employers have reported difficulty finding enough workers even after raising wages, offering signing bonuses, making hours more flexible and providing other incentives to lure employees.
Bistro on the Greens, a fine dining restaurant with a Cajun flair overlooking the Legacy Hills Golf Course in LaPorte, has been getting by with about seven fewer employees than normal. It's had to drastically reduce its hours of operation, opening for lunch and dinner only five days a week instead of seven.
"It's been stressful for a lot of us business owners," owner John Moultrie said. "The conversations I've had with other business owners are that the stress level is getting worse."
Difficulty finding workers has delayed his plans to reopen the Miller Bakery Cafe in Gary's Miller neighborhood. He wants to wait until he's confident it can be adequately staffed to ensure returning customers will have a good first impression of the new management.
For Bisto on the Greens, the labor shortage is a double whammy. It's also hit suppliers, making it harder to procure the ingredients that go into its signature dishes.
"The labor shortage is affecting suppliers," he said. "It's affecting everything — liquor suppliers, food suppliers. You don't know what will be in stock. It's been harder to find seafood, shrimp, salmon, catfish and steaks. We're still able to do so but it's more stressful. We're having to work harder to get our product in to ensure what's on the menu remains available."
Record high unfilled job openings
An estimated 50% of small business owners in Indiana reported that they could not fill job openings last month, a record high in a National Federation of Independent Businesses Survey. Unfilled job openings across the state are far above the 48-year historical average of 22%.
“Unfortunately, the news keeps getting worse and small businesses here in Indiana hit another challenging milestone. Now, half of all small businesses have positions they cannot fill. These folks are the ones who not only create two-thirds of the net new jobs here in our state but keep our economy running and can help pull Indiana out of a recession. If our small business owners can’t grow, then our state’s economy could be headed for troubled waters,” said Barbara Quandt, NFIB State Director in Indiana. “That’s because if small business owners can’t find workers, they will have to reduce their hours, the services and products they produce, and pass along those revenue losses to their customers.”
The impact is widespread, Strack & Van Til Chief Operating Officer Dave Wilkinson said. It's resulted in product shortages and longer waits at stores.
"I see impatient customers at restaurants, dry cleaners, grocery store, Target, Walmart — most every business," he said. "Most all of our suppliers are faced with labor shortages."
The issue has been affecting Highland-based Strack & Van Til's 20 supermarkets across Northwest Indiana.
"The labor shortage is affecting all of our stores and I’m sure most every other business," Wilkinson said. "Throughout the grocery supply chain, the product shortages are all due to lack of labor. It’s becoming a big problem — not just for Strack’s but for everyone."
As a homegrown hometown grocery store, Strack & Van prides itself on its customer service. But it has not been able to fill all its shifts amid the current labor climate.
"The labor shortage affects customer service," he said. "Associates are working harder to keep up. In many cases, we are falling behind and cannot produce all the products customers want. Longer lines at the deli and checkout."
Strack & Van Til has reduced hours in its service departments, mostly in the deli and bakery.
"We have considered closing stores earlier or opening later but have not taken those steps yet," he said. "Most businesses are in the same situation. Hourly wages are rising but it does not solve the problem. I’ve been to restaurants where they only have one server."
Company-wide job fairs have had a low turnout recently.
"Many stores have had no applicants at the fairs," Wilkinson said. "People are working longer hours. Burnout is happening."
Widespread reassessment of work
The National Retail Federation estimated about 7 million fewer Americans are working now than were before the coronavirus pandemic hit.
PNC Chief Economist Gus Faucher said demand for labor remains strong but supply remains low for various reasons, including lack of affordable child care and concerns over health.
"The labor supply remains constrained, with the labor force participation rate still far below its pre-pandemic level. PNC expects labor force growth to pick up through the rest of this year," he said. "Some of that will come from parents returning to the workforce as in-person schooling returns, and some from reductions in eligibility for and the generosity of unemployment insurance benefits — expanded and extended benefits expire in a few days. But continued concerns about the pandemic could prevent some people from returning the workforce. If they don’t, that would restrain job growth going forward."
Indiana University Northwest Associate Professor of Economics Micah Pollak said COVID-19 triggered a widespread reassessment of work that shifted workers' expectations for pay, benefits and flexibility.
"For example, some workers realized that their pay was barely covering the cost of child/elder-care and that by staying home and shifting to occasional gig-economy jobs they were better off," Pollak said. "Or, other workers realized that rather than risk exposure in a customer-facing minimum wage job, they could find similar pay and benefits delivering groceries or food and give them greater control over their work schedule and exposure risk."
Wages have increased and states have scaled back enhanced unemployment benefits, but money hasn't been the only factor affecting the labor market as of late.
"We have seen some jobs that were previously minimum wage offering higher wages and sign-on bonuses, which may attract back some workers," Pollak said. "But wages are not the only, or even the most important, factor for workers right now. Things like a safe work environment, both mentally and physically, healthcare and childcare benefits, flexible work schedules have all become increasingly important to workers."
Half the staff
The restaurant industry has been particularly hard-hit.
"We continue to experience a shortage in applicants, across all our locations," Doc's Smokehouse co-owner and Chief BBQ Officer Brent Brashier said. " As a company, we have about 50% of the staff we had pre-pandemic."
The barbecue restaurant, which has locations in Indiana, Illinois and Wisconsin, has been offering incentives to lure more workers back.
"We have increased our referral bonus to $300 for team members referring someone, and $250 signing bonus for all new hires. Wages have increased 30%," he said. "We are spending 10 times the amount we historically spent on recruiting. We have hired more high school and college students than ever before. But when school started back it had a negative impact on staffing levels as students reduced hours or returned to college. In the absence of hourly staff, our leadership team has stepped in to fill the gaps. Serving, hosting, tending bar, washing dishes are all part of a normal day for our leadership now. In light of all the challenges we have faced in the last year and a half, our team continues to push forward, and undoubtedly we are in a better position now than we were a year ago."
Not every workplace has been affected. Both Cleveland-Cliffs and U.S. Steel have been adding staff at their Northwest Indiana steel mills amid a climate of record steel prices and profits.
"We are consistently hiring for various positions across the corporation," U.S. Steel spokeswoman Amanda Malkowski said.
Family Express, a Valparaiso-based chain of convenience stores, is currently overstaffed despite the widespread labor shortages. CEO Guy Olympidis partly credits starting pay of $15 per hour and $50,000 for a manager.
"The labor market is extremely tight. Family Express is probably experiencing less difficulty because of our high starting wage and benefits package," he said. "We have concerns that a certain segment of the workforce will be hard-pressed to adjust from being paid to stay at home vs. going to work after the benefits have expired."
Short-staffed businesses have had to reevaluate how they do work with major fast food chains for instance studying automation and artificial intelligence as ways to run the same operations with fewer employees in the future. A Digital.com survey of 1,250 businesses found 75% have turned more to automation and outsourcing, which about half said could permanently reduce their ongoing staffing needs.
Other efforts center on expanding the pool of potential workers to fill the shortages.
Moultrie launched a Cooking for Change program at Bistro on the Greens that gives juvenile offenders a job and a second chance. He currently employs five juvenile offenders through the LaPorte County Juvenile Detention Alternatives Initiative and is looking to expand the program when he opens a second restaurant in Gary.
"It's been an inspiration to work with these juveniles, who are often stigmatized by the system but work through it," he said. "They come through our doors to gain experience and find their passion. It puts them back on track to achieve the American dream. It gives them structure, helps them support a family and nurtures any entrepreneurial aspirations they might have."
Tapping an underutilized part of the workforce helps during a time of widespread worker shortages, Moultrie said.
"They're a forgotten labor source that was probably overlooked for many years now," he said. "But now there are pretty decent opportunities to staff the restaurant. We're short in the front of the house and the back of the house. We're not just short of employees; we're short of qualified candidates and so are many businesses I have conversations with."