Business was good at La Cantina de Rita.
The East Village restaurant opened in the summer of 2020, but flourished during the pandemic with its large outdoor patio. It’s also a popular spot this summer, owner Jeff Bruning said, enough that he had to install misting fans to keep guests cool.
âWhen he hit 100 it was a little too hot to be there,â he said. “But people are raving about this place.”
Bruning says that all of his restaurants in the Full Court Press catering group are doing well, with some posting record numbers. The only problem? It is understaffed and no one is applying.
âBeing understaffed and making really good numbers is okay a bit, but in the long run it’s just not how we can keep it going,â he said.
The United States Bureau of Labor Statistics reported on Friday that 943,000 jobs were created in July and the unemployment rate fell to 5.4%. The gains have exceeded economists’ expectations, and President Joe Biden has touted them as a success. But employers in Iowa and the country are still struggling to fill positions as thousands have left the workforce.
âI would love to be a ‘hire now’ sign salesperson because I would be very well off,â Bruning joked.
Where have the workers gone?
Iowa state economics professor Peter Orazem said in a report Friday that “the rapid rebound in unemployment rates masks a relatively weak recovery in employment.” Since unemployment rates only measure people who are unemployed and actively looking for work, the percentages do not include those who have stopped looking for work and left the labor market.
âThe biggest concern right now is the labor force participation rate,â Orazem told the Iowa Capital Dispatch. âIn the most recent report, that hardly changed. And that has hardly changed since the start of the pandemic. “
The national participation rate – the number of people aged 16 or over who are employed or actively looking for work – was 63.3% in February 2020. It fell to 60.3% in April, then climbed to 61.4% in June 2020. The rate has fluctuated. been there for over a year, with a July 2021 rate of 61.7%.
iowa the labor force participation rate in June was 66.6%. Iowa peaked at 70.4% labor market participation in November 2019.
This means that although employers are adding jobs and the unemployment rate is falling, there are fewer people in the workforce overall – and therefore fewer people to fill the wave of new positions.
Why are people not re-entering the workforce?
Orazem believes people are slow to return to the workforce due to a combination of factors.
First, some older workers have decided to retire during the pandemic – sometimes perceiving unemployment when they exit. Orazem estimates that this represents around a third of the missing employees.
Others may have been excluded from their industry during mandatory shutdowns, leaving the job market.
Orazem said the last 40% of workers missing is “a real headache”, but he thinks unemployment benefits are an important factor. Iowa ended the additional $ 300 per week unemployment benefits in June, but some federal programs have allowed people to collect benefits for much longer than the usual 26 weeks.
âYou still have the benefits extending over a long period of time,â Orazem said. “And if you get paid half of your previous salary, plus you have full use of your time, that’s not trivial.”
Orazem predicts that Iowa will post an increase in employment in July due to the removal of the $ 300 additional benefit. He expects there will be a national boost in the fall as the $ 300 payments and extended benefits come to a complete end.
âUntil we get past September, when some of the extended benefits run out, I think we won’t have the full labor supply answer,â Orazem said. “But I think we’re going to start to see even bigger moves towards jobs.”
Did the reduction in additional unemployment benefits work?
Iowa was one of the first states to end its participation in additional federal unemployment benefits. Gov. Kim Reynolds has joined Republican governors across the country in ending the program earlier with the intention of getting people back to work.
Orazem believes Iowa will see a boost in change. But nationally, this is not a direct correlation between the end of benefits and the improvement of the economy. Orazem noted that many states that ended the benefits earlier were also states that reopened their businesses and lifted restrictions earlier – and states that were already on the path to a stronger recovery.
Other states that keep the benefit in place until it expires in September have faced longer lockdowns and larger overall job cuts.
âThe states that maintain the $ 300 overpayments are the states that have the most problems getting started,â he said.
Iowa’s hospitality industry offers higher wages and other benefits
Jessica Dunker, president of the Iowa Restaurant Association, said many hotel companies in Iowa are raising wages to get people back to work. They also offer more benefits, like paid sick time and vacation.
âThere is no one who is paying minimum wage and has employees right now,â she said.
Bruning said he was offering new hires at Full Court Press 10 to 25 percent higher salaries than before.
Orazem said wages in the hotel and recreation industry in the United States rose 13%. Weekly wages rose 19%, indicating that not only are people being paid more per hour, but they are also working longer hours.
Orazem says higher wages are an effective tool in bringing people back, but they could also lead to inflation. As companies pay their employees more, they must increase the price of their products and, in turn, wages will have to rise.
âIf we don’t start to get a faster employment response, or a labor supply response to increasing opportunities, I think you’re going to start to see even more upward pressure on wages, which will begin to factor in faster inflation, âhe said. noted.
Meanwhile, employers are fighting on another front: keeping their current workers in a highly competitive market.
âWe’re starting to see retention bonuses,â Dunker said. “Rather than getting people to sign, they make people say.”
Full Court Press recently gave employees a bonus, which Bruning said was a thank you for their loyalty during the pandemic. And the entire catering group closed on Monday for another morale boost: a corporate trip to Adventureland.
âWe were pretty much everywhere in the water park, our entire business,â he said.
What’s next for Iowa?
Iowa Workforce Development will release July employment figures later this month. Orazem expects to see an increase in the number of people working due to the end of improved unemployment benefits.
But the delta variant could stop the recovery in its tracks. Biden pointed out on Friday that, despite promising numbers, the top priority was to prevent another outbreak of COVID-19.
âMy message today is not a celebratory message. It’s a reminder that we still have a lot of hard work to do, both to beat the Delta variant and to continue our progress towards economic recovery, âBiden said in a speech Friday.
Orazem said Americans who refuse to get vaccinated amid the Delta outbreak could complicate the recovery in Iowa, especially if businesses have to shut down again.
“My concern is that, due to basic stubbornness, we are not going to be able to keep up the pace of the recovery,” he said.