In 'COVID paradox,' some employers with jobs to fill can't find workers

The topsy-turvy labor market is hitting some Minnesota employers with an unexpected twist: They're having trouble finding workers.

With unemployment still high and enhanced government benefits expired, the textbook rule of supply and demand says it should be easy for employers to find workers. While that's happening in many cases, some executives and hiring managers say they can't find enough.

Guild, a St. Paul-based nonprofit that focuses on mental health care, has continued to hire since COVID-19 threw the economy into recession this spring. Hiring was slow before the pandemic, but its leaders hoped they'd see an uptick in applicants, particularly from many other nonprofits that were laying off people, as the year wore on.

"We were thinking that maybe a silver lining will be that there will be a lot more job seekers and applications," said Julie Bluhm, its executive director. "Honestly, they've just continued to trickle in. It's been really surprising."

One clue as to what may be going on appeared in the most recent state jobs data, which revealed that more than 56,000 Minnesotans exited the labor force in September.

Some of them may have been baby boomers heading into retirement, a trend that has been putting strains on the workforce for years. But many appear to be younger workers who decided it was too stressful to work during the pandemic. For some, certain jobs don't appear lucrative enough to take on the added health risks and mental toll. For others, work-life balance has been thrown further off-kilter by the increased demands the pandemic has placed on them at home.

Of the two dozen jobs that Guild is trying to fill, Bluhm said some might be considered higher risk amid COVID-19 since they involve in-person work at a residential treatment facility. It's added $500 signing bonuses to those positions to drum up more interest.

"I don't know if it's because there are so many unknowns in our society right now that people are laying low," she added.

Brian Daugherty, who operates several restaurants around Duluth as president of Grandma's Restaurant Co., has experienced this, too. After initially laying off most of his staff in the early days of the pandemic, he's had a hard time calling back workers and recruiting new ones this summer and into the fall. It's a struggle that has persisted even after the additional $600 a week in federal unemployment benefits ended in July.

"You just kind of shake your head and go, 'Gosh, what is going on?' " he said.

Doug Loon, president of the Minnesota Chamber of Commerce, has been hearing similar stories across the state. He refers to it as a "COVID paradox."

Some of it may be because of a mismatch in the locations and occupations of open jobs with those who are out of work, he said. "For our economy to grow, we're going to need workers. We're going to need workers where the jobs are."

It's a "very lumpy kind of labor market" right now, he said after the survey came out in mid-October. Some sectors of the economy are rebounding quicker than others, with some firms still doing layoffs while others are hiring again after making job cuts earlier in the pandemic.

"The matching process (between available jobs and unemployed workers) isn't as smooth as a lot of people automatically think," he said. "In a pandemic, all of those circumstances are amplified. You have a virus threat. You have a day care issue. You may have mismatched skills."

Analysts at the Minnesota Department of Employment and Economic Development dug into the issue and settled on three possible explanations. People are not taking new jobs because they are: uncertain if they'll be called back to previous jobs, holding out for more government relief or concerned about being exposed to COVID-19.

Jacquelyn Carpenter, an executive at Twin Cities RISE, has heard a lot of health concerns from participants in her organization's workforce training programs. About 60% of participants have said they are hesitant to return to work during the pandemic, she said.

"They fear for their health and safety, not just for themselves but for their family," she said. "There's job opportunities available. But are they jobs the public feel safe enough to go accept?"

Dalana Thomas, a single mother in St. Paul, has family members who can help with child care now and then. But she knew it would be challenging to find someone to consistently watch over her 9-year-old daughter, whose school has gone online this fall.

"I can't always rely on family," said Thomas. "Everybody has their own lives and their own job schedules."

So when she was looking for jobs this summer, she gravitated toward remote work opportunities that would allow her to check on her daughter while her 1-year-old is at day care. She's finishing up a temporary remote job and will transition next month to a customer service role with Ecolab that she can also do from home.

Minnesota has now recovered about half of the nearly 400,000 jobs it lost early on in the pandemic.

The state's unemployment rate fell to 6% last month, down from a record high of 9.9% in May. But the latest improvement was mostly because many people stopped looking for work.

"We don't want people to give up on the labor market," said DEED Commissioner Steve Grove.

Instead, he hopes to shift the focus of unemployed workers to the jobs that are available right now — even if that means making a leap to another industry or moving to another part of the state. DEED recently launched a campaign called #GoodJobsNow to highlight some of the open jobs.

Manufacturing, for example, has bounced back much more quickly than other hard-hit sectors, such as restaurants and hotels where job losses have been deeper and longer lasting.

Up near the Canadian border in Warroad, Marvin Windows is so desperate for factory workers that it's dangling a $2,500 signing bonus and a $1,300 relocation incentive in addition to bumping up the starting wage by a buck to $16 to $20 an hour. Even before the pandemic, it took some "out-of-the-box" thinking to attract people to its manufacturing plant, said Rick Trontvet, senior vice president of human resources.

Now it's looking for another hundred workers to help it keep up with an increase in new orders that started coming in over the summer.

In Duluth, Daugherty bumped up wages about 5% to attract workers back to his restaurants. He said that has helped a bit.

With its night and weekend hours, Daugherty noted that the restaurant industry automatically rules some people out. Distance learning and day care challenges have made scheduling difficult for some workers. And while he tries to emphasize the extra safety precautions he's taking, he said some workers are wary.

"There are still people who are nervous, or scared, of coming back to an occupation that deals with the public," he said.

Some of his former employees, he added, have opted to take other kinds of jobs.

Ling Becker, director of workforce solutions for Ramsey County, said she can envision people who lost hospitality jobs making the switch to other industries with job openings such as manufacturing.

kavita.kumar@startribune.com 612-673-4113 • Twitter: @kavitakumar