On a recent weeknight, popular Little Rock-based burger restaurant Purple Cow is a hopping place, moreso behind the counter than in front of it. About a third of the tables are open, but there’s a 25-minute wait to be seated.
COVID-19, you ask?
The hostess, who’s doubling as cashier, grabbing phones, stocking ingredients and making milkshakes all at once, offers a tired smile.
“There’s a wait because we don’t have enough people working to take care of too many tables at once,” she said politely. “Thank you for your patience.”
According to business leaders and trade associations, American companies emerged from the fog of COVID restrictions only to plunge straight off a labor cliff. April’s jobs report from the U.S. Department of Labor reported a sickly 278,000 new jobs created that month, a fraction of the 1 million that Wall Street predicted, which business analysts blame in part on scant available labor, enticed to stay home by fattened unemployment payments.
May’s job figures, released June 4, were better but still fell short of estimates with 559,000 new jobs created, about 100,000 fewer than predicted. The national unemployment rate, per May’s report, is 5.8 percent on a labor force participation rate of just 61.6 percent, despite average hourly wages ticking upward to $30.33.
The sluggish national numbers come as no surprise to Arkansas business owners, many of whom have had to resort to drastic measures to maintain headcount.
“We’ve actually had to raise our starting wages, and we’ve taken a pretty good hit just doing that,” said Grant Hastings, vice president of Little Rock-based Arkansas Bolt Company. “For entry-level workers, warehouse workers, we’ve had to raise our wages several times actually over the past few months. That’s what we’re going through right now.”
Hastings, who said he’d easily add 10 more people if he could find them, had to look up his company’s current starting pay — $14/hour for general help, $15/hour for forklift drivers — so quickly and recently it had changed. Arkansas Bolt operates six locations in five states and employs about 120, the bulk of them in-state.
“We’re looking for some summer employees, like some high school and college talent, to come in and help us out,” he said. “Just some people trying to get some extra money, build some experience. So far, I think we probably have five or six, but we didn’t go looking for them; most are people who worked for us last summer too. That’s anywhere from entry-level in warehouse to accounting. We’ve been pretty fortunate to have some good ones.”
Tracy Gibby, a second-generation owner of cabinet maker Kimberly Enterprises in Cabot, counts her blessings for only being down a couple of workers. But she also knows the picture is skewed somewhat by her brother/co-owner and her eldest son working there too.
“This is hard work; it’s made a lot easier because we have a CNC machine, but I’m not going to lie, it is hard work,” she said. “It is almost impossible to hire for those positions.”
Gibby acknowledged being an anomaly, as most of her 15 employees are tenured and relatively young, providing a good hedge against the market’s current brisk demand. The positions she’s still trying to fill gives her a taste of what it would be like otherwise.
“I need one unskilled and two skilled workers,” she said. “When it gets busy like this, all other cabinet and construction companies aren’t letting their guys go. So, it’s hard to find experienced workers or new hires to get in to train.
“I don’t think COVID is helping. I don’t think unemployment checks are helping. I think there’s just much easier, more comfortable work for people to find.”
The status of America’s labor market, like most everything else in discourse today, is steeped in the politics of the source.
Conservative pundits blame in part or entirely the government stimulus and enhanced unemployment handouts of last year as giving too many people incentive to stay home instead of going back to work. In early May, Gov. Asa Hutchinson announced he would refuse supplemental federal unemployment assistance payments of $300 a week after June 26, in the hopes of moving people back into the waiting arms of the state’s employers.
“The programs were implemented to assist the unemployed during the pandemic when businesses were laying off employees, and jobs were scarce,” Hutchinson said. “The $300 federal supplement helped thousands of Arkansans make it through this tough time, so it served a good purpose. Now, we need Arkansans back on the job so that we can get our economy back to full speed.”
Such moves by Hutchinson and chief executives in other states (about half of U.S. governors have taken similar measures) are music to the ears of pro-business and right-leaning groups such as the U.S. Chamber of Commerce, which issued a dire warning about the direction of labor and unemployment with results of a new study, released June 1.
In it, the Chamber noted labor as “the most critical and widespread challenge facing businesses right now” thanks to 8.1 million vacant job openings nationwide in March, up 600,000 vacancies from the previous month. Moreover, there’s roughly half as many available workers (1.4) for every open job across the country as there have been on average over the past 20 years, per the report.
“The worker shortage is real, and it’s getting worse by the day,” Suzanne Clark, president and CEO of the Chamber, said in a statement. “The worker shortage is a national economic emergency, and it poses an imminent threat to our fragile recovery and America’s great resurgence.”
But for every such alarm sounded by pro-business groups, there’s equally vociferous opposition contending the situation is more opportunity than anchor, a chance to rebalance power between the executive suite and the production floor.
“Work needs a rethink, but the country isn’t ready for it,” chimed Juliana Kaplan and Ben Winck in a May 30 Business Insider article. “Some jobless Americans say it’s as simple as wanting higher pay after years of declining buying power. For others, expensive child care and health issues are placing work lower on their list of priorities. Americans are also looking for better labor conditions after working from home sparked a society-wide reassessment.”
Tim Fernholz, writing on Quartz.com on May 27, echoed the “it’s-the-wages-stupid” mantra, writing, “So, is there a labor shortage? The short answer is, not really… The labor market is a market, and that means buyers need to offer the right price. Industries that relied on cheap labor before the pandemic are finding it harder to do so for many reasons.”
And The Atlantic put the least-fine point on the debate yet, positing on June 1 that a labor shortage might actually be a good thing.
“The job of the government is not to ensure a supply of workers at whatever wage rates businesses set,” wrote Annie Lowery. “And workers’ having the power to say no is not a policy problem that the government needs to solve. For decades, though, Washington and America’s statehouses have helped rig the country’s policy infrastructure in employers’ favor.
“The government has long encouraged low-wage jobs and forced people into them. This is what we are seeing when governors rush to slash unemployment insurance at the first sign of a real recovery and when policymakers describe workers’ demands as a ‘drag’ on the economy. Uncle Sam is acting in the interests of low-wage employers, not the economy as a whole.”
Such rhetoric rankles Hank Browne, founder of Hank’s Fine Furniture and an employer of 250. Browne blasted those in the Washington echo chamber, calling the labor situation on Main Street the worst he’s ever seen since getting into the furniture business in 1966.
“No, nothing like this,” he said. “I can’t imagine who put all this together, the economists in Washington or whoever, to throw all of that money to people with the stimulus and then to create a situation where you have nobody to work, to build the product and to spend that money. No, I didn’t think I’d ever see that in the United States of America.”
Browne said he’s been fortunate to hold onto his employees through last year, although he did have to close a store in Texas and three in Alabama. He’s about to open a new store in Mountain Home, but said staffing was made easier by a longtime competitor closing up shop, enabling Hank’s to scoop up displaced employees. But even this relatively positive picture isn’t beyond the negative impact of the labor issue elsewhere in Browne’s supply chain.
“It has had quite an effect on the availability of merchandise,” Browne said. “I was talking to a man that owns a pretty large factory in Mississippi who builds sofas, loveseats, chairs, that sort of furniture. He has had a terrible time getting people, between the ridiculous stimulus that’s come out of Washington and all of the extra money they’re giving on unemployment. It has created a huge demand, but it also created a hell of a lot of people that said they will not come back to work as long as they can get that extra unemployment. So, we’ve got this big demand, but nobody to build the merchandise.”
The result, Browne said, is delivery times on domestic furniture ballooning from four to six weeks to three to four months or more. And imported furniture, which he buys from Indonesia, Thailand and Vietnam, has spiked as foreign suppliers look to capitalize on the shortages here in the States. What used to cost $4,500 per shipping container now costs $12,000 to 15,000, increases that ultimately impact the consumer.
“Believe me, Ms. Jones who’s waiting on her new sofa does not like that, even though it has been explained to her extensively at the time she bought it,” Browne said.
The strain of the labor picture is particularly evident in the state’s service industry. Visit almost any Arkansas drive-thru, and you’re likely to see a posting pleading for patience over menu shortages and speed of service, all due at some level to the lack of workers to process, package, ship and ultimately prepare and serve.
Darryl Webb, who purchased five Central Arkansas McDonald’s restaurants in January, said it’s not about the people in line but getting enough people on the line.
“The business is performing very well as the quick-service industry, and specifically McDonald’s, has thrived throughout the pandemic,” Webb said. “This is largely because our business was so well set up for carryout, drive-thru and in our delivery platforms, ordering on the McDonald’s app as well as through our third-party delivery partners. As we’ve seen our business grow, we’ve increased the need for our staff to grow.
“Let me talk broadly: For McDonald’s in Arkansas, more specifically Central Arkansas, we see the opportunity to increase our hiring by somewhere between 2,500 and 3,000 employees. I would say that in Little Rock specifically, that number is probably about 250 to 300 employees. Now take my restaurants specifically. I am looking to hire, over the next 30 to 60 days, 30 to 40 additional employees in my restaurants alone.”
Filling these needs takes creativity in recruiting, Webb said, as well as communicating the full range of opportunity that comes with a role at the company. Specifically, he points to rapid advancement, flexible hours and benefits such as Archways for Opportunity, the McDonald’s tuition assistance program. It’s a perk available to employees working 15 hours per week after just 90 days on the job.
“Almost every one of my employees qualifies, because most of my people average over 15 hours a week,” Webb said. “They have that opportunity without any restriction; all they need to do is apply. I approve them based upon their performance record, and they can qualify for up to $2,500 in upfront college tuition. These are things that are the core fundamentals of who McDonald’s is.”
Webb admits nothing is a given with the labor pool being what it is right now, but if there’s one thing that experience in the industry has taught him, it’s how powerful a lure opportunity can be.
“A long time ago, back in 1975, I started in the service restaurant industry,” he said. “I started with McDonald’s as a training manager in 1979, and I spent 25 years here. I stepped away and did some other things in the restaurant space, then was given the great opportunity to come back as a franchisee after being gone from McDonald’s for nearly 20 years.
“So, while I will tell you I wouldn’t go so far as to say that I’m overly optimistic, I’m also not pessimistic about the labor situation. I am very hopeful that as the economy continues to get back on track and as workers find their way back into the workplace, my business specifically, and also the McDonald’s business broadly, is really well-positioned to be an employer of choice. I’m not just talking hyperbole.”