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Some local businesses say unemployment benefits could be leading to less motiviated workforce.

PMG FILE PHOTO  - Gemini Bar & Grill reopened earlier this summer, but the popular establishment has struggled to hire new employees. Editor's note: This is the first installment of a series on the local job market. Part two will focus on the perspectives of workers and job-seekers.

Before the pandemic, it was typical that April Garstin, general manager at Lake Oswego's Gemini Bar & Grill, would hold 100 interviews when hiring for various positions.

"Now, I put out an ad and within a week, I'm lucky to get 11 (applications)," Garstin said.

Of those 11 applications, there are about three she has communications with and usually none are qualified for the job.

But Garstin needs bodies just to stay open. She said hiring unqualified candidates can cause the quality of the establishment to dwindle and the service to slow.

Garstin is not alone. While things have improved over the last few months, businesses across the Portland metro area are struggling to remain open full time due to what some call "unprecedented labor shortages."

According to the Oregon Employment Department, the leisure and hospitality industry accounts for the bulk of Oregon's 44,500 jobs yet-to-be recovered since early 2020, despite the fact that the industry has regained 60% of jobs lost since early in the pandemic.

Amy Vander Vliet, an economist for the state employment department, pointed out that while the number of people who were unemployed for a short period of time fell dramatically this year, the number of people unemployed for over a year has budged only slightly since its peak in April. Prior to the pandemic, that number was around 9,000 and now it's over 41,900 — down from a peak of 48,300.

"I don't know where everyone is at. They can't all be sitting in their parents' basement, can they?" said Hank Jarboe, the owner of Boston's Pub & Grill in Wilsonville.

What are local businesses experiencing?

Rohit Sharma, who owns the new Hilton Garden Inn in Wilsonville, said he's giving employees $600 signing bonuses and significant pay increases and yet he's still having trouble retaining employees for long periods of time and can't fully open the hotel restaurant because of a lack of workers.

Heather Welker, general manager of the Lakeshore Inn in Lake Oswego, said they've also tried advertising higher wages and have been handing out employee bonuses to incentivize workers.

"It didn't even seem like the money mattered," Welker said.

A survey from the Oregon Restaurant and Lodging Association found that 38% of business respondents said they are offering greater incentives to current and prospective employees to get them to work.

"They join us at a certain wage, which is more than anyone else is paying, and then there's another offer paying $5,000 even more," Sharma said. "It's like how the residential market is. It's like a bidding war. The same thing is happening here," Sharma said.

The ORLA survey also showed that just 4% of respondents said they were fully staffed and nearly 80% said they needed at least 20% more employees.

Restaurant Five-0-Three in West Linn, for instance, has had trouble hiring cooks.

Earlier this summer, a chef at Five-0-Three gave owner John McEwan several weeks' notice that he would be taking a job closer to home, but McEwan still struggled to find a replacement.

"I figured no problem, we'll just fill the position, and eight weeks later I still can't find anybody," he said.

Jarboe said part-time jobs have been particularly difficult to fill. He's had to close the pub on certain days because they didn't have enough workers to keep it open. And current employees — everyone from cooks to servers — are often working overtime to fill the gaps.

The Wilsonville-based food supplies company Sysco, meanwhile, has had to pause some of its deliveries due to hiring struggles, according to a statement from the company. This has caused supply chain issues.

"We are aggressively recruiting delivery partners and warehouse associates, and our goal is to restore service to our impacted customers as soon as possible," the statement reads.

What's the cause?

Local business owners have said they think the extra boost in unemployment benefits and pandemic relief caused more people to stay home.

"It's not an incentive to get back to work," said Shari Newman, owner of Nicoletta's Table and Marketplace in Lake Oswego. "I don't know if that will change in September (when unemployment boosts are expected to end). I kind of hope it does."

Garstin thinks the trouble hiring has a lot to do with unemployment boosts. She said it was helpful but "now it's been a crutch."

"From my heart … I believe it has nothing to do with the virus itself," Garstin added. "That is not the concern at all."

But while the federal benefits expired Sept. 4, the situation may not change dramatically — particularly if other states are any indication.

Studies have shown that states that cut off federal benefits early haven't seen higher job growth figures than states that haven't. Meanwhile, the end of federal benefits might mean the reduction in purchasing power for low-income folks, according to Portland State University Economics Professor John Luke Gallup.

"There's surprisingly clear evidence there's almost no pickup in hiring when they cut off the benefits," said Luke Gallup. "In practice, it just made people worse off with no improvement in the labor market. From the evidence we have it's pretty clear that wasn't why people weren't going back to work."

However, there is some evidence that rescinding the benefits could have some effect. For instance, according to the payroll platform Gusto, states that ended federal benefits early saw an increase in workers over the age of 25 while states that didn't saw an uptick in workers between the ages of 15 and 19.

Bulwinkle's in Wilsonville, for instance, has struggled to hire adult workers. General Manager Darren Harmon said he's hired a lot of football players from West Linn and Wilsonville and that they've done a good job.

But as kids go back to school, they may have to close two days a week.

"As soon as COVID restrictions and unemployment runs out, I think it will start to rebound somewhat — but I don't think it will happen in the next six months. We'll be OK in the spring and summer. It's going to be tough this winter," he said.

Young people have made up the majority of applicants at Ace Hardware in West Linn as well. Assistant Manager Mike Taylor said that for the past year, most people looking for work at the store were high school and college-age kids.

Those hoping to receive unemployment benefits must demonstrate to the state that they are actively looking for work. But some business owners feel that certain applicants may be gaming the system by not showing up to interviews.

Welker said that a few years ago, people were serious about interviews and always turned up. Now she feels people are "trying to meet a quota of being able to say they've applied for something."

"I think it's just the grunt work jobs," said Welker, adding that she's had an even harder time hiring housekeeping positions than front desk positions. "People are going to be picky right now."

While not buying that unemployment benefits are the cause, Luke Gallup doesn't have a clear idea of what's causing the labor shortage. He suggested that the shutdowns may have caused people to rethink how they wanted to spend their days.

"Once they actually were cut off from working they realized 'I don't want to do this kind of thing anymore,'" Luke Gallup said. "A second reason may be, particularly for service workers, they're scared to go back to work in the context of COVID being still around."

Newman and others have noticed some workers deciding to change career paths.

"We have really struggled with servers and line cooks and our management team is very good, and we're fine there, but the mid-level is — I guess what you might call it — the cooks," Newman said. "I think some of them have decided that it's such an uncertain way to make a living that they ... went to other places."

Vander Vliet added that some families may have realized during the pandemic that they don't need multiple incomes to get by. She also speculated that people in the leisure and hospitality industry may be transitioning to transportation and warehousing, sectors that are growing exponentially.

"Maybe they are finding better wages in that sector or better working conditions or benefits or a combination of those three," she said.

The hardly waning COVID-19 pandemic is likely another cause. According to a recent survey from the Bureau of Labor and Industries, 32,500 people did not work for COVID-19-related reasons, which could include being sick, caring for someone who is sick or having to handle child care. And that data was from before the current spike in cases perpetuated by the delta variant.

However, while Vander Vliet and others posited that child care burdens may be a cause of the employment shortage, the Oregon Office of Economic Analysis blog pointed out that the unemployment rate for women, who often carry child care responsibilities, is lower than men, and women with children are outperforming women without children nationally.

"These findings are surprising to some and do run counter to the conventional wisdom," the blog read.

PMG FILE PHOTO  - There are varying theories for why demand has slacked for local hospitality jobs, but some believe the situation will change after unemployment benefits expired this month.

Things may not be as bad as they seem

According to Luke Gallup, the view of the current economic situation depends on which vantage point you're standing from. If you're a worker, there are jobs available and you may even get a significant pay raise. If you're a small business owner, you may struggle to stay afloat with increasing wages and shorter staff. Luke Gallup noted that wealth inequality has risen precipitously over time and has only been exacerbated as higher income folks have easily transitioned to a work-from-home lifestyle while lower income workers lost their jobs.

"Given we've had a massive increase in (wealth) inequality in the last 40 years, if this turns out to be a significant effect it means people earning less would get paid a bit better and business owners who tend to be getting higher income, a bit less. I don't see that as a bad thing society wide," he said.

And conditions seem to be improving. According to the Oregon Office of Economic Analysis blog, jobs are growing while unemployment is receding. And the number of Oregonians who are not in the labor force is also declining.

"Firms today are trying to staff up as quickly as possible to meet this increasing demand," the blog stated. "The actual number of jobs created this year will be the largest on record in Oregon. The state's labor market is now expected to regain all of its lost jobs by next summer, or one quarter sooner than in the previous forecast."

Tony Palazzo, vice president of operations at Logical Position in Lake Oswego, said the company was met with challenges they'd never faced before this past winter and spring.

While they recently had record-breaking months of hires, it did not come without an extra push.

"It took a lot of persistence paired with new strategies in recruiting," Palazzo said.

Palazzo added that the competition for new hires was tough. Employers, including Logical Position, were so optimistic about the outcome of the pandemic that they were trying to find people "sooner than the market was wanting to enter, or change careers."

Logical Position adjusted the recruiting process and scripts, and doubled their recruiting efforts, ad budgets and the amount of platforms the company advertised with.

"We really had to cast that net out," he said.

During the pandemic, Palazzo said he noticed the company hired many people for entry level positions from different industries, though he said this was not abnormal.

"COVID presented everybody with an opportunity to reassess what mattered to them and that could be relevant to their career focus," Palazzo said. "What mattered to everyone kind of changed."

He said Logical Position likely remained appealing to folks because of the remote opportunities, flexibility, virtual engagement and work-life balance.

And not every business in the hospitality industry has had trouble hiring. Lake Oswego Mayor Joe Buck, who owns Gubanc's Pub, Lola's Cafe Bar, Twin Fir Kitchen and Babica Hen Cafe, said hiring has been more of a challenge than normal but he's seen a notable increase in applicants within the last couple weeks.

And as more people become vaccinated, Buck thinks the economy will improve.

"Nationwide, it seems that locales with higher rates of vaccination are recovering better economically, and we can certainly see that in LO," Buck said. "People feel more comfortable working here knowing the vast majority of patrons are vaccinated and folks are generally very compliant with the safety precautions and respectful of the folks having to implement those rules."

Nancy Faubel, the owner of Corner Coffee Shoppe in Wilsonville, dealt with hiring challenges for months during the pandemic. Recently though, she's received an uptick in quality applicants dropping off resumes at her store. For Faubel, a full staff means employees are able to do their jobs better and customers are more satisfied. Business, meanwhile, has picked up even as the delta variant increases caseloads.

"That makes it much easier for me. If customers aren't stressed and employees are less stressed then I'm less stressed," Faubel said. "I was not this optimistic a month ago."

Holly Bartholomew contributed to this story

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