Utahns don’t have to go far to see the effects of the labor shortage — from hiring signs in restaurants and gas stations to businesses still running on reduced hours.
At the epicenter of growth in the Intermountain West, “we continue to have one of the strongest economies in the country,” said Phil Dean, chief economist at the Kem C. Gardner Policy Institute at the University of Utah.
That has benefits, but also challenges — that growth has created a need for workers that the state hasn’t been able to keep up with.
Utah has about 40 unemployed workers for every one hundred open jobs, making it one of the states with the most severe labor shortages, according to a U.S. Chamber of Commerce report published this month. South Dakota also had 40; while North Dakota, New Hampshire, Vermont, Nebraska had fewer, and Minnesota had the least, at 32 unemployed workers for every 100 jobs.
And last week, Utah tied for the second lowest unemployment rate in the country, at 2.1%, according to new data from the U.S. Bureau of Labor Statistics, leaving employers struggling to keep and grow their workforce.
Utahns are waiting in vain for things to go back to normal — “we are in a new normal,” Dean said.
During the pandemic, many baby boomers retired, he said, resulting in a permanent shift in the economy.
But while the pandemic may have accelerated some workers’ decision to retire, this change was already in the works before COVID-19, with talk of a labor shortage even back in 2018, Dean said.
“Businesses have been used to cheap, readily available labor because it’s been there for so long,” he said, however, “I don’t think it’s coming back.”
Over the last year, economists have seen declines in “real wages” — those adjusted for inflation, Dean said. Historically, workers have been willing to accept lower wages in Utah because of the relatively low cost of living, but rising housing costs mean living in the state is not as cheap as it used to be, he said.
Employers will have to make a decision, Dean said: How much do they need labor?
They can either restructure their business and rely more on automation, or “pay market wages and have good working conditions,” he said.
In June, the University of Utah Health’s Redwood Health Center cut back some of its service hours. In August, a Salt Lake City Wendy’s posted a sign warning customers that it would be closing earlier than usual due to short staff, as other fast food outlets have done this summer. A sign at a Sugar House CVS Pharmacy this month said its drive-thru window was closed due to a shortage of staff.
Low-paid retail and service workers have been among the hardest to hire; Starbucks said it rolled out a new minimum wage of $15 an hour in August in part to address the shortage.
“Every business that I’ve talked to will tell you that their number one challenge is hiring,” with the tourism and hospitality industries being hit particularly hard, Derek Miller, president and CEO of the Salt Lake Chamber, told The Salt Lake Tribune in September.
[Read more: Here’s what would persuade Utah parents to work more]
The entire restaurant industry here is struggling to find qualified employees, agreed Michele T. Corigliano, executive director of the Salt Lake Area Restaurant Association.
One restaurant owner told her, she said, “before, we used to interview, check references, check their experience in the industry, and that’s who we would hire. Now we just hire based on whoever shows up.”
Before the pandemic, she said, kitchen jobs “were paying $14 an hour, $15 if they had a lot of experience. Now, no one will work for less than $20 to $22 an hour.”
So, she explained, “not only are they getting untrained people at this premium ... but all the people that were working, they started at $14 and they worked their way up, with experience and tenure at the restaurant or bar. They’d go up to $20. But when they see these new people getting hired at that rate, then they expect the same kind of raise. So everything has gone up.”
Meanwhile, food expenses have gone up 25% in the last two years, she said.
“To be able to cover this raise in what they charge customers, they can’t even raise it that much, so all that means is their margins are even slimmer than they were before the pandemic,” Corigliano said. “And before the pandemic, the restaurant and bar bottom lines are very, very slim.”
That’s especially true “in Utah, where they have to pay full price for alcohol,” she said.
For a small state, higher wages will do a lot to draw workers from out of state, but education remains “a very, very significant driver of our workforce,” Dean said.
On a systemic level, he said, Utah needs to keep supporting the education and training of people — whether that’s trade school or higher education.
Leto Sapunar is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep him writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.