Minnesota employers ramp up hiring, but some workers remain tentative

Mystic Lake Casino Hotel is trying to lure workers with signing bonuses of up to $1,000. With 350 open positions, it held a job fair last week that featured a gourmet food bar, DJ and door prizes.

Valleyfair boosted wages for some of its seasonal positions by $2 an hour as it looks to fill hundreds of jobs. Famous Dave's, the Minnetonka-based chain of barbecue restaurants, is looking to hire more people in every job — servers, hosts, prep cooks and dishwashers.

After a year of steep job losses and a tepid bounceback, many companies are ramping up hiring as the economy is rebounding, consumer spending is on the rise and vaccines are rolling out. But some employers are finding out, as others discovered last summer and fall, that it's not necessarily easy to hire workers, even with so many people on the sidelines because of the pandemic.

"From our perspective, the labor market is super tight," said Jeff Crivello, CEO of the parent company of Famous Dave's. "It's very difficult to fill positions."

Labor availability was the top challenge, aside from consumer demand, cited by businesses in the region in a mid-April survey by the Federal Reserve Bank of Minneapolis. About 45% of firms said it was extremely difficult to find workers, and a little under 30% said it was moderately hard to do so.

Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development, hears from employers every day who are struggling to fill positions, particularly in industries such as manufacturing, health care and hospitality. Even though vaccines are flowing, he knows the virus still is circulating in the state.

"With the variants being the predominant strain out there right now, I think there is still some tentativeness about getting back into in-person workplaces," Grove said.

Some may be waiting until they're fully vaccinated, with only a third of Minnesotans having reached that benchmark so far. At the same time, some parents still are tied up at home with children doing distance learning at least part of the week.

Valleyfair, which is planning to open for the season later this month, is struggling to hire, especially for food and beverage jobs, its human resources director, Melissa Lutz, said.

"If you go out in the community, if you go through a drive-through, there's a 'Now Hiring' sign," she said. "So there's lots of competition for those types of jobs."

Many businesses are paying more than they used to, she said, especially since companies like Target raised their minimum wage to $15 an hour. That's why Valleyfair decided to raise the pay for most food-related jobs from $11.25 an hour to $13.50 an hour.

Troy Reding, owner of Rock Elm Tavern and Holman's Table, said he's stepped up his referral bonuses to employees for bringing in applicants. He now pays them cash on the spot.

"It used to be that we'd wait 90 days to make sure the employee worked out," he said. "We just can't do that anymore."

About a third of his previous employees have come back. The rest either weren't interested or found employment elsewhere, he said. He wonders if some have switched industries.

He'd like to hire 20 to 30 more employees, especially with patios filling up in warmer weather. He also hopes to start resuming lunch services but is having an especially difficult time recruiting at his restaurant in St. Paul. "We couldn't open for lunch right now with the staff we have," he said.

Caribou Coffee also is boosting hiring as it expects to be busier in the coming months. But Kendall Harrell, vice president of people and culture, said its applicant flow began to decline at the end of last year.

He thinks one reason is some workers are getting called back to their previous jobs after being furloughed.

Many business owners also partly blame the extension of unemployment benefits as well as an additional $300 a week approved by Congress until September. They argue that is keeping workers on the sidelines and reluctant to go back to work if they don't have to.

In the early days of the pandemic, several studies looked at whether jobless benefits, along with the then $600-a-week top-off, deterred people from returning to work last year. They largely concluded no.

Aaron Sojourner, a labor economist at the University of Minnesota, said it would be useful if those studies were updated. But so far, he said there's no reliable evidence that unemployment benefits are discouraging people from returning to work.

"I think it's possibly a small factor," he said. "I don't think it's a big factor."

The main economic issue continues to be the virus, he said. "It's still out there," he said. "People are worried about it. It's still affecting people's ability and willingness to work."

Minnesota's unemployment rate fell to 4.2% in March, down from a high last year of 11.3% in May. Still, many economists caution the number can be misleadingly low because it doesn't capture people who have left the labor force. In Minnesota, that's estimated to be 93,000 people, or about 3% of the prepandemic workforce of 3 million.

At the same time, the job market still has a long way to go in the recovery, with only about half of jobs bouncing back so far.

But there are encouraging signs. Job listings are picking up after seeing double-digit percentage drops last year. In the Twin Cities metro area, job postings were a whopping 79% higher for the first three weeks of April compared with a year ago, said Erin Olson, research strategist at St. Paul-based RealTime Talent. That also was slightly ahead of 2019 volumes for the same time period.

"We've gone through a period of such suppressed demand that we're likely to see inflated demand for a period of time as employers catch up and start filling a lot of those roles," she said.

Jason Dailey, CEO of Brand-ography, a Minneapolis-based digital marketing firm with about 30 employees, said he was finding job candidates last year, but many were nervous to accept a new job after just getting laid off.

He's finally seeing some of those people begin to re-enter the workforce. But in his field, the main challenge now is competition to hire them.

"Demand is just through the roof right now," he said.

JeanAnn Nelson Trombley, Mystic Lake's vice president of human resources, also has found that some people who are employed are reluctant to switch jobs.

"They don't know what's going to happen with the pandemic," she said. "They also don't want to be the person with the least amount of tenure."

After furloughing about 3,000 employees in the spring last year, Mystic Lake has been calling back employees in waves. Most returned, though some older workers decided to retire, she said.

"And we do have people letting us know that they're still not ready yet," she said.

While the candidate flow has been slow, she is optimistic it will pick up, especially once the school year is over and more people are vaccinated.

"Slowly, the levers are going to start to turn," she said. "And we're starting to see it."

Julian Teran of Champlin felt it was too risky to return to work for most of the past year after losing his job at a warehouse early in the pandemic.

But he recently got his first vaccine shot. Two days later he was at the Mystic Lake job fair where he got an offer on the spot to be an ice porter, a job he hopes will lead to other positions with the company.

"I'm more comfortable to start working now," he said. "Finally, I can come back to normal activity."

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