WCMA Notes: Help Wanted!

An encouraging, yet stressful, sign of a recovering economy is the difficulty dairy manufacturers and suppliers face in trying to hire new workers. Several trends have converged to create unprecedented tightness in the labor market for at least several months to come.

Nationally, more than 266,000 workers rejoined the workforce in April, the latest month announced by the U.S. Bureau of Labor Statistics. The national unemployment rate held at 6.1 percent in April, meaning 9.8 million Americans were unemployed. Within that total are 2.1 million Americans still facing temporary layoffs and 3.5 million whose employment loss was permanent – 2.2 million higher than pre-pandemic (February 2020).

Looking at key dairy states, Wisconsin added 9,300 non-farm jobs in April 2021 for a 3.9 percent unemployment rate, and Michigan, South Dakota and Iowa also have returned to pre-pandemic rates below 4 percent.  Minnesota has seen a significant drop in unemployment, though economists attribute the most recent dips to people exiting the workforce entirely.  The story is not the same nationwide, with California, Illinois, and New York still well above the national jobless rate.

Challenges in finding labor are building as opportunities expand for cheese and butter sales into foodservice channels. Open Table reports that just under 80 percent of restaurants were accepting reservations in the U.S. in late May and daily seating at restaurants is reaching 100 percent compared to the same day in 2019.

WCMA has spoken with numerous dairy processors about difficulties in hiring in recent weeks. One major processor captured several concerns in one insightful quote: “We’ve never experienced this amount of difficulty with production staffing.  The additional unemployment benefits are not helping, but there also seems to be a shortage of people compared to the amount of jobs available (especially as our more tenured Associates start to retire).”

Let’s break down the trends in that thoughtful quote.

First, WCMA members uniformly report difficulty in attracting candidates to interviews, let alone successfully hiring new workers.  To incent new employees, a handful of manufacturers have added sign-on bonuses, ranging from $750 for summer help, to $1,000 for new workers remaining at least 30 days, to $2,000 for employees reaching the six-month mark.

Second, there’s widespread concern that unemployment benefits are keeping potential workers on the sidelines.

The Center for Budget and Policy Priorities reported that unemployed Americans, on average, receive $387 per week in unemployment assistant, rising to $687 with the $300 federal supplement delivered in the American Rescue Plan passed by Congress in March. This is the equivalent of $17.17/hour in a 40-hour work week.

A report released by economists at Bank of America in May drew this conclusion:  "Our estimates suggest that those who previously made less than $32,000 would be better off in the near term to collect UI benefits than work.”

Around the U.S., 24 states have drafted legislation to end the weekly $300 federal unemployment supplement or bonus. The bonus is set to expire September 6, but governors in many of these 24 states have pledged to end the add-on as early as June 12.

Last week, Wisconsin joined the ranks of these states, and based on the urgent need for labor, Wisconsin Cheese Makers Association has advocated in support of this effort to end the federal bonus. Dairy State legislators plan to act on legislation in June, however, Wisconsin Governor Tony Evers may veto the measure.

The job-search website Indeed reported last week that in states announcing an end to the federal bonus, clicks on job postings rose 5 percent relatively to previous weeks.

The third insight from our WCMA member is the availability of workers overall.

The Bank of America unemployment report stated that in addition to some workers not finding jobs, another 4.6 million exited the workforce in 2020 – no longer seeking to find new work. These Bank of America economists estimate that more than half or 2.5 million of those “lost” workers will rejoin the workforce in 2021, as evidenced by gains in April’s unemployment report, but some hurdles remain. 

Fear of catching COVID-19 remains significant among some portions of the population as well as limits on available childcare for many families.

An uptick in retirement in the last 12 months has also trimmed the workforce. U.S. Census Bureau data shows the retirement rate rose for people 65 to 74 years old: It reached 65.6 percent in the year ending March 2021 versus 64.0 percent in the year before the pandemic. In addition to health or job concerns, favorable home prices and stock market values are putting older Americans in a better position to retire.

Employers are addressing these hurdles with new flexibility in staggering shifts, rotating days for work in and out of the office, and flexing the starting and finishing times for individual employees each day.

Strong competition for a diminished pool of workers may be a sign of economic recovery, but it’s a stressful burden on dairy companies ready to fill the supply chain.