The Weird Phenomenon of “Labor Shortages” as Millions of People Who Could Work Are Not Working

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A sign of how messed up the moving parts of the economy have become, amid massive excesses and distortions connected by malfunctioning gearing.

In an interview a few days ago that aired locally, the owner of an Italian restaurant in San Francisco – the restaurant scene is now vibrant in a different way than before – put her struggles with hiring on the table. The kitchen staff had come back, she said, but she had trouble hiring back the staff for the front of the restaurant, the wait staff, who are normally fairly well paid via tips.

She said that many of these people have other dreams. They were artists or writers or students or entrepreneurs, or whatever, and waiting tables wasn’t their career, it was just a way to make ends meet. And many of them had moved on during the pandemic or were using their unemployment benefits to push their dreams forward, rather than returning to restaurant work.

Employment in food services and drinking places rose by 186,000 in May from April, according to the Bureau of Labor Statistics today. In the leisure and hospitality industry overall – which also includes hotels and casinos – employment jumped by 292,000 in May, and has been gaining all year as restaurants and hotels reopened, but was still down by 2.5 million people compared to the peak in February 2020.

Every restaurant owner has their own struggles. Pay raises are being implemented to bring people back, including at big chain restaurants. But what the owner of the Italian restaurant said was that for her, hiring waitstaff, who earn substantial tips, was the difficulty; and that her kitchen staff, the hourly employees, were largely back at work. Which makes the whole story a lot more complex.

Then there is manufacturing. The complaints from manufacturers about the difficulties of hiring have been circling for decades, as the industry is requiring ever more sophisticated labor because automation is playing an ever-larger role.

But now, in addition to the difficulties of finding the right kind of labor, manufacturers are deeply tangled up in supply-chain issues and being able to get components, raw materials, and supplies in time, with lead-times blowing out, putting a damper on what they could manufacture, and on the labor, they could employ if they got everything they needed…..

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Continue reading this story at Wolf Street.

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