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Unemployment remains high, yet many businesses say they can’t find enough workers

From restaurants to cloud computing companies, small businesses have run into the COVID-19 conundrum. They can’t find workers, even though unemployment remains at high levels.

Kevin Nolan, president of Nolan Painting, at a job site in Wayne on Tuesday. His company is hiring for about 20 positions with starting pay at $15 an hour but is having a hard time filling the positions.
Kevin Nolan, president of Nolan Painting, at a job site in Wayne on Tuesday. His company is hiring for about 20 positions with starting pay at $15 an hour but is having a hard time filling the positions.Read moreDAVID MAIALETTI / Staff Photographer

Home improvement has boomed during the pandemic, but Nolan Painting can’t keep up with all the demand.

Last month, the Havertown-based residential painting company turned away 150 potential customers, president Kevin Nolan said. The reason? His business can’t hire enough workers, despite airing ads offering $15 an hour with benefits. His staff of about 108 is still 20 workers short of what he needs.

“We’re desperately trying to get people,” Nolan said. “It’s at the point where there are no applicants, which is unbelievable.”

From restaurants to cloud computing companies, some small businesses have run into what seems to be a counterintuitive problem. They can’t find workers, even though unemployment remains at high levels. That has left some businesses unable to expand capacity as coronavirus restrictions recede and the economy recovers.

Some employers blame extended jobless benefits, arguing that the extra help has disincentivized returning to work. But the situation is more complicated, according to company officials, economists, and workers.

Businesses are offering low wages for jobs that workers consider risky during a pandemic, especially if they haven’t been vaccinated. A lack of child care is a barrier for workers with school-aged children. And the difficulty finding labor is not limited to low- or mid-wage jobs, with companies having a hard time hiring for higher-paid positions, too.

“The competition for qualified workers has become a lot more severe,” said Ryo Tashiro, senior outreach economist at the Federal Reserve Bank of Philadelphia.

» READ MORE: Restaurants offer signing bonuses to new employees amid a labor shortage

Despite anecdotal evidence from businesses, liberal economists said it’s unlikely the United States is facing a labor shortage. Heidi Shierholz, director of policy at the Economic Policy Institute in Washington, noted that there are still far more unemployed workers than job openings, according to federal government surveys. She said there haven’t been meaningful wage increases, either, which are a hallmark of labor shortages.

“It’s certainly happening in places,” Shierholz said of businesses having a hard time finding workers. “The real question is not whether it’s happening here or there, but is it a driving force in the labor market? And when you look at the data, it just doesn’t come up.”

At the same time, in March, 42% of small-business owners reported job openings they could not fill, a record reading from the monthly survey of 10,000 businesses by the National Federation of Independent Businesses. That is 20 points higher than the 48-year historical average of 22%.

The unemployment rate in the Philadelphia metropolitan area was 7.3% in March. That’s way down from a peak of 15% in April 2020, but still well above the 4.4% before the pandemic. The region’s labor force, which includes those working and actively seeking jobs, has shrunk by 107,000 since February 2020, a sign that many have given up looking for work.

Meanwhile, local employers have ramped up their hiring. Since February, weekly job postings across the region have jumped 17.3% to about 17,650 a week In April, according to the University City District, a nonprofit improvement district.

SKF, a Sweden-based maker of ball bearings, is looking to fill about 20 jobs at its U.S. headquarters in Lansdale, including “customer solutions” staffers who fill orders, update clients, and offer technical assistance. In the past, such job postings would fetch 70 to 100 applicants a week, but, lately, the company gets about a dozen a week, said Claudia Garcia, the company’s U.S. director of customer solutions and experience. Garcia declined to share salary specifics but said SKF offers market-high compensation for the customer-facing jobs.

“I thought that because of the unemployment rates and so many industries being hit hard, we would be flooded with candidates and our recruiting time would be even shorter than before,” she said.

Madison Nardy was laid off from her job at Philadelphia International Airport last year and isn’t rushing to get back to work. She is receiving unemployment benefits while studying political science at Temple University, where she said her professors have assigned more work since classes went virtual.

» READ MORE: Philadelphia International Airport projects a 35% increase in nonstop destinations this year

It’s not just the extra school assignments that’s keeping her from looking for work. “I don’t want to go back to a job where I’m being exploited for $12 an hour,” said Nardy, a member of the OnePA progressive advocacy group. She called for a raise to the $7.25 minimum wage.

“They say extending unemployment is going to make people not go back to work when the real issue is we don’t want to go back to work because employers are giving us low wages,” she added. “When people start going back to work, people are going to be making a lot less money than they are now. And people are going to be struggling even more.”

Some companies have boosted pay or offered bonuses to lure workers. Twenty-eight percent of business owners told the NFIB that they raised compensation in March, the most recent data available. Amazon, which is hiring for tens of thousands of jobs across the country, recently said it would raise pay between 50 cents and $3 an hour to help its hiring efforts.

The King of Prussia District, a business improvement nonprofit, hoped to close the staffing gap Tuesday with its first-ever job fair. There are 390 part-time and full-time positions that 31 businesses, most of which are chains, hope to fill immediately, said Rachel Ammon, a spokesperson for the group.

“If you were to drive around King of Prussia on the weekend, it’s busy,” she said. “We’re busy again.”

» READ MORE: Pennsylvania’s unemployment office is hiring 500 people to answer busy phone lines

The urgency to fill positions was evident at the job fair, which was free and open to all: Applicants with or without experience could get an interview and job offer on the spot. The King of Prussia District said it had also sponsored a $20,000 bonus program, in which the first 65 people to accept a job offer from a restaurant or hotel would get a $300 bonus. Some other businesses, such as Valley Forge Casino and Resort, are offering their own bonuses, as well, Ammon said.

With some businesses desperate to hire, job seekers could have more leverage now, experts said. For higher-paying jobs, companies are often vying for candidates with multiple offers, said Peggy Gionta, president and founder of Broomall-based Partner’s Consulting, which recruits IT project leadership for large corporations. Companies must pay market-competitive wages and don’t have the luxury to take weeks or months to decide on a candidate, she said.

“It’s really a candidates’ market right now,” Gionta said. “The employers are definitely struggling to identify, attract, and retain top talent.”

CoreDial, a Blue Bell-based cloud communications company, is looking to add developers and engineers as its revenue growth accelerates. But the positions have taken up to five months to fill, said Alan Rihm, the CEO and founder. It didn’t use to be that way.

“It’s not that we can’t fill the roles. It’s that when you’re a fast-paced, high-growth company, you want to fill those seats as quickly as possible,” he said. “It’s taking longer than we would like.”

Staff writer Katie Park contributed to this article.

The Future of Work is produced with support from the William Penn Foundation and the Lenfest Institute for Journalism. Editorial content is created independently of the project’s donors.