After the federal government began offering $600 a week in enhanced unemployment benefits during the COVID-19 pandemic, many predicted an unintended consequence: a labor shortage when the economy reopened.
It appears those predictions are proving true at least among Durango’s restaurants, which provide 3,500 out of 35,000 jobs in La Plata County, according to a report from the Colorado State Demography Office from February 2019.
Steamworks Brewing Co. will be closing each Tuesday, with the first closure occurring earlier this week.
It was a decision largely driven by a staffing shortage, particularly in Steamworks’ kitchen, where the starting wage is $15 – $3 above the minimum wage without counting tips shared from the tip jar for take-out orders.
“It’s hard to blame people. They’re making more money by not working,” said Kris Oyler, CEO and founder of Peak Food & Beverage, which also owns El Moro Spirits and Tavern and Bird’s restaurants in Durango. “You would think – we brushed up against 20% unemployment nationally in June – that there’d be a lot of people out there clamoring to go to work, but they’re getting regular unemployment plus $600 weekly. There’s not a lot of incentive for them to go back to work.”
Rod Barker, owner, president and CEO of the Strater Hotel, kept his inn open throughout the COVID-19 health restrictions, and even in April when he was seeing only four or fewer rentals a night, he said finding employees for entry level and cleaning positions was difficult.
“A lot of people who might be interested in working, frankly, can make more staying home with enhanced unemployment, so it’s a pretty tough environment,” he said.
With businesses reopening and travel coming back, Barker said the tight labor market has only become more problematic.
Enhanced unemployment is slated to expire July 31, and both Oyler and Barker think that might help bring more people into the labor market.
But by then, Barker said businesses might have adapted to a new normal in the labor force, and that might mean a reduced number of jobs.
“In the meantime, a lot of businesses are figuring out ways to scale back to fit the new labor environment, and when people return in August, they may find there are fewer opportunities for them,” he said.
Dave Woodruff, general manager of El Moro and president of the Durango Chapter of the Colorado Restaurant Association, said he doubts the tight labor market, at least for the foreseeable future, will lead to price increases at Durango restaurants. Instead, as Barker suggested, restaurants will look to cut back in other ways.
“There’s only so much you can charge for beef enchiladas. Nobody’s going to pay $25,” he said.
What diners will likely see at their favorite Durango restaurants, he said, are reduced offerings on menus, counter-service instead of a full waitstaff and reduced hours, the option chosen by Steamworks.
“If you can’t find someone to operate the saute station, you’re going to drop sautes from the menu. If you can’t fill shifts, you’re going to reduce hours, like Steamworks. A full-service restaurant is going to transition to a customer-service format,” he said. “A price increase will only happen as a last resort, when wages go up. You’ll see restaurants doing a lot of adaptations before that.”
Jack Llewellyn, executive director of the Durango Chamber of Commerce, said the tight labor market is a frequent topic of conversation among business owners extending to industries beyond the restaurants.
“I definitely agree, a number of individuals, and not just in restaurants, are having trouble finding employees,” he said.
The fact that Fort Lewis College ended spring semester early and many students, who normally would have stayed in town for the summer, left, Llewellyn said, also is a contributing factor to the tight labor situation.
As businesses reopen, Llewellyn is concerned the tight labor market will confine what’s possible for businesses, perhaps forcing others to follow Steamworks’ lead in reducing hours.
Durango hotel room occupancy rates, he said, were among the top three in Colorado in June, which provides economic opportunities other towns might envy, but also further highlights Durango’s issues with a tight labor market.
If Congress changes or extends enhanced unemployment benefits, the results will likely have a major impact on the local labor market, Woodruff said.
One idea brought up in Congress that Woodruff likes is paying people on unemployment a one-time benefit if they find a job rather than extending enhanced unemployment benefits beyond the current expiration date of July 31.
Sen. Michael Bennet, D-Colo., has called for extending enhanced unemployment benefits, but he wants the benefit to step down from $600 extra a week to $450 and then $200 as the economy improves.
“Nobody here wants to be in a place where the unemployment benefit is disincentivizing people from working, and that’s why we step it down. But (enhanced unemployment) needs to stay in place until this economy heals. It’s the wrong approach for the country, and for working people in this country to send them over the cliff right now,” Bennet said in a speech earlier this month.
Whatever changes might be made to enhanced unemployment benefits, the current situation has led to Tuesday blackouts at Steamworks, Durango’s largest restaurant.
Oyler said: “We literally just got to the point where we’re short particularly in the kitchen, so many people – were missing probably 25 to 30 shifts that we need on a daily basis – that we just figured out something was going to have to give, and for us that turned out to be Tuesdays.
“I don’t know if there is a magic bullet out there. We’ve put (the jobs) out on social media, we’ve advertised in various forms that usually get pretty good traction. We’re trying harder at this point in time than we’ve ever had to. Short of dragging people in off the street and putting them in uniform, I’m not sure what else we can do.”