Across the nation open positions are at record highs. Employment has definitely picked up, but not at a pace required by many businesses. The return to normal has been anything but in terms of the labor market.
In Cape May County the summer shift that increases the population eight fold demands a major upswing in workers for the hospitality industry. It also requires significant additions of seasonal manpower in the municipalities struggling to provide basic services to the surge of visitors and second home owners. Suddenly those seasonal workers are not there.
There are many reasons why the labor market in the county has been so tight. The one that generates the most attention is the federal unemployment booster of $300 a week. That amounts to $7.50 an hour for a 40 hour week over and above what the state unemployment benefits are paying. Are there workers sitting out the start of the summer season because “it pays not to work?” We have all heard the anecdotes.
Traditionally unemployment in the county goes from double digits in January to less than 5% in the high summer months of July and August. In 2019, the year before the disruptive impact of the pandemic, January unemployment in the county stood at 13.3%. By August it has shrunk to a state low of 3.6%. That is the rhythm of a seasonal economy.
So what are the numbers now? We have April data from the Federal Reserve. That data shows that in April 2019, unemployment stood at 7.5% and this year the number was 10%. It is a difference, a significant one, but not quite as dramatic as one might expect seeing the help wanted signs everywhere. There is another factor at play here.
For most of 2020 the J1 Summer Work Travel Program was closed down by Executive Order of the President. That ban did not expire until the end of March, 2021. Varying COVID restrictions in other countries, staffing issues at U. S. embassies and consulates, and priority given to U. S. citizens at those locations all have severely limited the program again this year.
This program is crucial to the state’s tourism industry. In 2019 New Jersey businesses sponsored 5,272 Summer Work Travel visas. That was the sixth highest use of the program in the nation. Cape May County used between 2,500 and 3,000 of those foreign workers during the 2019 summer season, a record year for tourism in the county.
Cape May County Chamber of Commerce President Vicki Clark stated the issue clearly in a letter to the Herald. “Cape May County’s population of 92,000 year-round residents is not sufficient to fill the number of seasonal jobs created by our tourism industry.” Clark is right.
The Bureau of Labor Statistics puts the county labor force at about 45,000. That number has been consistent with minor variations for years. The number of county residents employed in the summer months who are on unemployment in the fall is about 4,000 individuals, not enough to meet the needs of seasonal employment without the added 3,000 workers from abroad.
The perfect storm for county businesses seeking to recover from the COVID year is a boost in unemployment benefits keeping some of those county workers on the sidelines combined with a slow start-up of the Summer Work Travel program that show few signs that it is going to speed up soon. The result is fierce competition for the workers that remain.
It is important not to gloss over yet another factor working against businesses seeking employees. It was only a little over a week ago that Governor Phil Murphy removed caps on child care, caps that undoubtedly kept some potential workers from returning to jobs. Throughout the pandemic Murphy has adopted a preference for a single state policy on almost everything, electing to homogenize unique areas of the state with very different economic needs.
Using the numbers from the Federal Reserve, the county is seeing a decline in local workers in seasonal jobs. But that decline is not as steep as the one caused by the significant reduction in foreign workers. Removing the capacity limits on child care, however, late as it came, may help.
It is important that those satisfied with collecting the enhanced unemployment consider what they will do when those benefits end in September and they do not have the requisite hours of work to collect unemployment in the late fall and winter.
The scramble to resolve some of these issues is on. The competition for available workers is driving up pay scales that may be difficult to pull back from. Ultimately for 2021 it is likely to be yet another year when the ingenuity of businesses will be put to the test.
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From the Bible: A little sleep, a little slumber, a little folding of the hands to rest, and poverty will come upon you like a robber, and want like an armed man. Proverbs 6:10-11
