Labor and unemployment

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October 16, 2021

A Dunkin coffee shop in Colorado Springs is temporarily closing after the number of staff fell from fifteen to three and can`t find anyone to replace them. McDonald`s and Chick-A-Filet is reportedly considering closing their dining rooms due to labor shortage and covid-19 concerns.

Long waits in restaurants, hiring signs on windows, long, snaking lines at store registers and monthlong delays for home renovations – the pandemic introduced us in the US to the relatively unknown phenomena of labor shortage. Here in Florida and nationwide as well. Besides retail, hospitality and construction sectors, lack of workers is a problem for many businesses including, warehouses, service and manufacturing companies.

Government statistics telling us that currently there are about 11 million people in the US receiving unemployment benefits. Altogether people on payroll are 5.3 million less, than before the pandemic. About half of them are actively looking for a job without immediate success. The other half is supposedly out of the labor force citing different reasons including unemployment insurance (10%) financial cushion (20%), care responsibilities (18%), employed spouse (21%) or covid fears (23%).

Soon however we might be able to start seeing the light at the end of the tunnel. Florida government is forecasting an improved unemployment rate (3.4%) for the last quarter of the year – even below the national estimate. Contributing factors could be the early September discontinuation of two federal pandemic-specific unemployment programs which was giving out up to $300 per week to those who qualified and the fact that kids are back to school now driving less need to some for at home care responsibilities.

This unprecedented labor shortage is forcing companies to rethink their recruitment and employee retainment strategies. Large retailers like Amazon and Walmart acted quickly to ensure required staff availability before the holiday shopping season starts in the US. Amazon is increasing minimum wages to $18 per hour, offering $3000 sign up bonus, committing to providing educational support covering tuition and books for staff pursuing bachelor’s degrees. Smaller companies like restaurants in Florida are struggling to hire people and also compelled to raising hourly wages and, in some cases, closing for one or two days per week while balancing available labor capacity. (Florida’s minimum wage has increased from $8.65 to $10 per hour starting in September and will eventually reach $15/hour by end of 2026.)

Experts say that the recovery of the labor market could take at least a year however we should start seeing some improvements from very soon.

Sources: The Wall Street Journal, Florida State Websites, floridatrends.com

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