The nationwide worker shortage that held down U.S. job growth last month boils down to this: Many workers are seeing their wages and savings swell but they have fewer places to spend that extra cash.
Businesses that can’t find enough workers are pushing their existing staffers harder, converting part-time employees to full time and asking full-time workers to put in lots of overtime. That’s providing more income to Americans who have already socked way three rounds of government stimulus checks totaling $3,200 since the COVID-19 pandemic began more than a year ago.
In other words, workers who hunkered down at home the past year and built up savings, are itching to boost their spending as the economy reopens fully this spring and summer.
But companies that can’t find employees are churning out fewer products and services. They’re setting aside restaurant tables that can’t be served and hotel rooms that can’t be cleaned. They’re cranking out fewer cars, appliances and floral bouquets for special events. The labor shortages, combined with lingering supply-chain bottlenecks, means the economy, while poised to grow briskly this year, isn’t firing on all cylinders.
“If it turns out that if you cannot meet demand….the economy cannot grow as rapidly as people had anticipated,” says Bernard Baumohl, chief global economist at the Economic Outlook Group.
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Limiting number of hotel rooms
Neema Hospitality, which owns 12 hotel franchises in Maryland, Pennsylvania and West Virginia, has seen sales and occupancy reach 75% of its pre-pandemic mark. Company President Sandeep Thakrar wants to add about 50 housekeepers, front desk clerks and other employees to a workforce of about 150 but receives about four applications for job openings that used to draw 20. The low number comes despite a 10% hike in starting pay.
To cope, Thakrar has hired residential and commercial cleaning services that cost triple his usual labor expenses. About 20% of his employees also log five hours a week in overtime. Still, Thakrar has had to take 10% of the rooms at a hotel off the market several times this spring because they couldn’t be cleaned. He recently shut down a third of a 90-room hotel in Pittsburgh.
“We’ve never done that,” he said. “We make money when we sell the rooms.”
He worries such measures will become more common as the busy spring and summer season heats up.
A smaller economy, higher inflation
Baumohl, of the Economic Outlook Group, expects the economy to grow at a robust 8.7% annual rate in the current quarter but he says the worker shortages and delivery disruptions pose risks to that forecast. The dynamic of too many dollars chasing too few goods and services – along with…
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