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3 reasons businesses may be suffering from staffing shortages

3 reasons businesses may be suffering from staffing shortages
Posted at 5:14 PM, Oct 27, 2021
and last updated 2021-10-28 07:59:37-04

RICHMOND, Va. -- Central Virginia business owners say they're on the verge of closing permanently because there aren't enough workers. It's been a problem since the pandemic started, but it's only getting worse.

Many owners were hopeful they'd be fully staffed again by now, pointing to the end of enhanced federal unemployment benefits. However, they're finding out that's not the case.

Cooks and servers have been working hard around the clock to bring breakfast to hungry customers at Eat 66 in Richmond.

“The people who are working here, thank goodness, are very dedicated and very loyal," said owner, Brad Smallwood.

But those workers are stretched thin.

“We normally would have 12 to 13 full-time employees or up to 17 full-time and part-time," he said. "We’re down to about six right now.”

CBS6 first caught up with Smallwood back in April when his staffing conundrum began. He thought more people would eventually come back to work in September when the extra $300 in federal unemployment benefits expired.

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“In fact to my surprise, it’s even worse than it was before," Smallwood said.

In order to keep operations going with limited staff, he said he closed the restaurant on Mondays and cut back hours. After months of running a business like this, he's left wondering where all the workers went.

“If they’re not working, that sends a signal to employers in the future that maybe they’re not so interested in working," said Leslie Stratton, the Professor Chair of Economics at Virginia Commonwealth University.

She said cutting off the additional aid didn't spur a huge surge in people seeking jobs but said the extra benefits did have an effect somewhat on labor shortages.

However, Stratton said another kind of government assistance is causing concern for economists. While the evidence is not clear yet, she said some experts believe child tax credits may be a disincentive.

"There is some concern that [child tax credits] could possibly be encouraging some people to stay home because they're now guaranteed a paycheck every month to help feed their children," she said. "And so maybe it's a little less important for them to go out and get a job."

Stratton suggests some other reasons people left their jobs include:

  • Workers were unhappy with how their boss responded to COVID-19
  • Low wages, especially in the hospitality industry
  • A shift in priorities.

“There are a lot of job opportunities out there, and some people have decided to switch occupations," she said.

CBS 6 has also heard from hundreds of Virginians who said they've applied to dozens of jobs deemed entry-level, many of them at firms, but they can't get a callback. Stratton said this isn't anything new.

“I think it's long been known that people are applying to a lot of jobs, especially electronically," she said. “Yes, it looks like an entry-level job, but they often ask for experience anyway.”

Stratton recognized misleading ads can cause frustration for those attempting to enter the workforce.

At Eat 66, applications trickle in every now and then, but managers said most folks don't even show up for interviews. Additionally, they said they'll spend money and resources training new employees who end up quitting after a week or two.

If nothing changes, Smallwood said he'll be in an extremely tough spot.

“Truthfully, I'll probably be a couple people away from having to close down if we lose anybody," he said.

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CBS 6 also asked Congressmen representing Virginia to weigh in on the worker shortage crisis.

In April, Republican Congressman Rob Wittman told CBS 6 he believed enhanced unemployment benefits were keeping people from going back to work at the time. He recognized recent unemployment numbers underperformed and now points to requirements on small businesses that could be disincentivizing people from working including vaccine mandates.

Another reason Wittman suggested: some people are receiving significant financial assistance from the CARES Act and supply chain issues.

"We need to evaluate every dollar that's going out into the Cares Act and making sure it's directed to people that actually need it," Wittman said. "And we have to get supply chain production back to the United States. We have to create those high-end manufacturing jobs that we know we can do well."

Meanwhile, Democratic Congressman Donald McEachin never suggested enhanced unemployment aid played a role in labor shortages when we asked in April. He still insists these issues boil down to how bosses treat their employees.

"Employers have to come up with a better model, and they've got to start paying people a fair wage," he said. "It does not make any sense that people who are working full time should just be barely getting by."

McEachin doesn't agree that other forms of assistance are causing people not to go back to work.

"The notion that the $350 check for a child, depending on the age of that child is, stopping somebody from going to work is ludicrous," he said referring to the child tax credits.