Friday, July 2, 2021

The local labor shortage is the new norm


Look around.


“Help wanted” signs are everywhere.


At most workplaces, those signs have been in place for months and will remain there for many more. Businesses and non-profits in every community and every sector imaginable are looking for workers, lots of them.


But, there are few to be had.


The labor market has become so competitive that businesses are raising their wages dramatically or offering sign-on bonuses in hopes of attracting people. That same labor market is so undersupplied that restaurants are dropping hours and whole days, manufacturers are increasing their lead times by months, general contractors are declining new business, and farmers are letting fields and orchards go idle.


In these dire straits, the default response by employers is that the federal government has been too kind to the unemployed, that recent public assistance has become a lifestyle and not a lifeline. They are right…to a point.


When you take New York’s unemployment payout and add to it the federal $300 bonus, expanded child tax credits, recurring stimuli, and tax-free status unemployment and stimulus earnings, it’s pretty easy for a lot of people to do the math, stay at home, and ride out the pandemic’s aftermath until the well runs dry.


While these folks are (ab)using the system, the number doing so is far fewer than what the knee-jerk reaction might lead you to believe.


Anecdotally, think of how many of your workforce-ready family members, friends, and neighbors are not working. I’ve really had a hard time coming up with any in my circle. I’m sure you would, too.


Statistically, we’re accurate in such observations: In May 2019, when the national economy was doing well, the Buffalo-Niagara unemployment rate was 3.7%. In May of this year, with the economy reopening, it was 5.3%. Those numbers aren’t too far apart.


So, once the $300 sunsets in September, there won’t be as many people looking for work as the popular narrative predicts. It won’t be a flood of job seekers. It will be a trickle. We’re talking about fewer than 13,000 workers across the entire region if we want to get back to where we were in 2019. 


If this current federal government largesse isn’t the cause of the labor shortage, then what is?


It’s past and present government largess and largeness at the state level.


We are now seeing the end result of high taxes, ever-growing regulations, and stymied economic development. We’ve encouraged, by discouragement, people to leave the Empire State.


For years now, we’ve fretted about the changing population and demographics here. The population has gotten older on average. Younger people have left for greener pastures. The number of residents – and especially of working age -- has tanked.


Literally, there’s no one available to work.


Things won’t change in September.


This is the new norm.


This is the way it’s going to be for years.


On the bright side, well into the future, this availability of opportunity might be the thing that finally encourages young people – those born here and those here for college – to stay. But, we have to hope that this seemingly-sudden need isn’t temporary – the lack of workers doesn’t cause businesses to cut back on forward strategies, close, or move. Then, we’re right back to square one. 


Regardless, it’s going to take time.


Employers and policymakers have to adjust and adapt to that.


Businesses looking to get back to where they were or where they one day hope to be are going to struggle if they don’t. Plan now to do more with less, whether that’s more work for the principle and her team but less revenues through lower output or fewer hours, or, in some industries, more revenues through streamlining, automation and investment in personnel.


The State and local governments need to look for these businesses to ensure this labor crisis doesn’t crush them. That can be done in two, very immediate ways.


First off, economic development agencies must put a full stop on courting new businesses to come to New York. That may seem nonsensical, but the reality is, economic development begins at home. They need to focus on making existing businesses whole or better by preparing and providing workers to the entrepreneurs who have already staked claim to New York. They shouldn’t be courting outsiders like factories, call centers, and warehouses to come here – they each need employees by the dozens or hundreds. Where will they get them? Those firms, enabled and empowered by grants and tax breaks, will pirate employees from existing businesses already spread thin.


Secondly, officials must apply significant pressure on the federal government about getting back into resettlement. One thing that saved WNY, and especially Buffalo, from falling into the abyss over the past twenty years was the inclusion of refugees and immigrants from Asia, Africa, and the Middle East. Their influx kept our population decline much lower than it could have been and they’ve kept workplaces like mine going strong. But, over the past few years, we’ve seen very few New Americans come to WNY. President Trump had closed our borders to countries like Myanmar and President Biden has been no friend to refugees, too, because his administration seems overwhelmed by and overfocused on issues at our southern border. One border shouldn’t close all of them.  


As businesses weather this labor shortage, along with the consumers who need their goods and services and the governments who want their sales/property/labor taxes, we have to accept as a region, as a state, that it’s not temporary and that it’s deeper than $300.


This is the new norm. Plan accordingly.   



From the 05 July 2021 Greater Niagara Newspapers and Batavia Daily News  

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