What’s happening? SC loses jobs in April even as businesses decry worker shortage
Ask any business owner in South Carolina how they are feeling right now, and you’ll more than like hear one main complaint.
They can’t find any workers.
The problem has gone on for months now. The tourism industry, in particular, began sounding alarm bells as early as February about an impending lack of workers that would make the spring and summer surge of tourists unbearable.
Yet, in April, as restaurants, hotels and other businesses began frantically posting jobs and offering thousands of dollars in signing bonuses — South Carolina lost jobs, state labor data shows.
What?
One of the biggest losses came in the hospitality and leisure industry. It lost 1,300 workers, according to state labor data. Those same restaurants and hotels who can’t find employees — servers, hosts, cooks, housekeepers, front desk staff — are hemorrhaging staff rather than growing.
The other sectors to lose jobs were manufacturing (2,500); professional and business services (2,300); financial activities (1,300); and trade, transportation and utilities (800).
Hospitality and leisure is the only industry to struggle with gaining workers for two months in a row. In March, it neither gained or nor lost workers, according to state labor data. The sector hasn’t gained workers since December 2020 and still has yet to recover nearly 40,000 jobs lost during the pandemic.
All three sectors that lost jobs in March — education and health services, government and information — increased significantly in April.
The trend has baffled economists, labor leaders and hospitality experts. Despite 82,000 jobs posted in the state, according to South Carolina’s labor department, something seems to be keeping people at home. Nearly 118,000 South Carolinians were unemployed as of last month.
“We’re in a worse job situation now than we were in March,” Federal Reserve economist Laura Ullrich said. “Nationally, the job growth came in pretty far below expectations. A lot of economists were expecting about a million jobs to be added in April and they only saw 260,000 jobs added.”
Driving forces
Ullrich said there are two widely accepted potential causes for what’s happening in the labor market.
- People in lower wage jobs, like hospitality, have received stimulus checks and expanded unemployment and might be just “choosing not to work.”
- Wages have not increased at the same rate as corporate profits and higher wage jobs, and people are choosing to be pickier (and look for higher wage jobs) while they can rely on extra government support. These same people might also be still facing high child care costs with online school and/or are still worried about COVID-19. (Only 35% of the S.C. is fully vaccinated.)
The former reason has been more popular with Republican leaders and politicians, including Gov. Henry McMaster, who have accused Democrats and the Biden administration of hurting the economy by “encouraging” people to stay at home.
The latter has been more popular among Democrats and has been supported by more research. Wage stagnation has been a widely studied problem for years, and the New York Times reported Thursday that people might be waiting around on finding a job in the hopes that businesses will finally be forced to pay them more.
McMaster and the South Carolina Department of Employment and Workforce have moved in the last few months to force people back to work.
In April, the state reinstated the requirement that people receiving unemployment benefits show proof that they are actively looking for work. Some businesses have told The Sun News that they questioned how much this will help, saying it’s easy to game the system and show proof of looking for jobs but not actually applying for them.
McMaster went a step further on May 6, announcing the state would no longer accept the federal government’s expanded unemployment benefits (the extra $300 per week) starting June 30. That will drastically cut the weekly unemployment paychecks South Carolinians receive. This gets at an accusation levied by some businesses in the state that their former workers can make just as much, if not more, on unemployment than they could working.
“Now is the time to act, before the end of the federal programs which will likely begin a rush for the open positions,” the state labor department’s director Dan Ellzey said. “The demand for labor is intense. Employers are eager to find their workforce and, in many cases, can provide what unemployment benefits never could, critical medical benefits, 401K and retirement opportunities, and long-term security.”
Ullrich said that cutting off those benefits won’t just catapult people back into the workforce. What’s more likely is that it might motivate people to invest more energy in finding a job now before the extra money disappears.
“Some people think it’s going to cause all of these people in rush back into the workforce at once,” she said. “I’m a little skeptical that that is going to happen. I think it will move the needle, but I think there’s other things going on as well that may not make it quite as impactful.”
Unsustainable environment?
Whatever the state does, coastal regions like Myrtle Beach are struggling right now, and cutting off the extra unemployment benefits in June won’t help worker-less businesses facing a rising tide of customers.
Myrtle Beach Hospitality Association CEO Stephen Greene said that at businesses everywhere, people are being forced to double up on jobs or work extra hours. Restaurant managers are serving. Hotel front desk employees are cleaning rooms. There’s a point, though, that businesses will have to offer fewer services, rooms or tables if they can’t find enough workers.
“People are just having to get more creative on how they’re handling things with staff, to make sure guests’ expectations are met, but also to not burn your staff that is currently employed out,” Greene said. “You just can’t work them the amount of hours we probably could work if we had more staff.”
Recurring problem
It’s not new for South Carolina to struggle to find workers.
“Before the pandemic, we were at all time lows in terms of the unemployment rate here in South Carolina,” she said. “We were in a really tight labor market, and so it seems like what’s happening is where we’re reentering a tight labor market, even though we still have a lot of people, a lot of jobs that haven’t been recovered, which is a bit surprising.”
The worker shortage, particularly in hospitality, might not even be related to the state’s current population of unemployed workers. To be unemployed, a resident of South Carolina has to both not have a job and be actively looking for work.
Many people saw the pandemic as a wake up call for their lives, Ullrich noted, and maybe have decided to retire early or switch careers completely. While the state lost jobs overall, the education and health Services, construction, government and information sectors collectively gained 3,600 jobs.
Maybe, “because of covid and also because of the chaos of everything else, they’re choosing to be a little pickier about what they’re doing,” she said. “Maybe they’ve had to think about it and they don’t want to go back to the same low wage job they had before.”
This story was originally published May 24, 2021 at 10:00 AM.
