A Closer Look at Michigan’s Worker Shortage
July 1, 2021
By Heather Nezich, courtesy of SBAM Approved Partner ASE
Michigan is experiencing a severe worker shortage causing many local businesses to reduce hours and/or have a backlog of projects. There are many factors contributing to the shortage.
The Livonia Chamber of Commerce, which ASE is a proud member of, recently surveyed their members to gather their input into the impact of the current worker shortage. They have compiled the results of the survey with additional feedback received directly from businesses in the community.
Impact to Local Businesses
Businesses like restaurants have had to reduce their hours of operation due to the lack of employees. Several have had to delay opening. Construction and repair jobs are being delayed by months. Many public pools have reduced capacity or hours.
Employers are reporting no-shows for interviews or even scheduled work. It is reported that 75% of people who schedule a job interview, do not show up. Employers are having to deal with increased salaries in order to attract talent. For example, ASE’s 2021 Michigan Compensation Survey shows that light assembler positions saw a 6.6% increase in wages compared to the overall state average of just 2.1%. This creates a highly competitive job market for those positions.
Unemployment is being widely blamed for workers not wanting to return to work. In fact, the Chamber reports that workers are requesting to be paid in cash in order to continue receiving unemployment benefits. Federal pandemic aid continues to boost unemployment payments by $300 each week and extends payments for as long as 18 months – much longer than the typical 26 weeks or less. The federal benefits are set to expire in early September, but states can opt out before then. However, while Michigan legislature passed a bill to end the federal pandemic assistance, the Governor is expected to veto the measure. For those receiving full benefits in Michigan, it equates to making $16.55/hour.
Issues Beyond Enhanced Unemployment
There are many other contributing factors beyond unemployment payments though. They include:
- According to the Chamber survey, three-quarters of current opening are jobs required to be done on site. But as the ASE Return to Work Survey revealed, many employees are still afraid to return to work or don’t want to return. When employers were asked, “What are your current challenges related to the pandemic and / or return to work deliberations?” ASE survey respondents responded:
- Employee’s hesitation/refusal to return to work at the corporate locations.
- Mental health.
- Staff not wanting to go back to working in an office and quitting.
- Childcare accommodations, employee fears, equipment.
- Employees who want to work at home and not return to the office.
- With more jobs and increased salaries available, people are taking advantage of opportunities to pursue new jobs and improve their personal situations. With all the job openings, people can be more selective. Employers must pay competitively in order to attract talent.
- Salaries are going up, but not enough to cover transportation and childcare costs for lower-wage workers. The ASE 2021 Michigan Compensation Survey reports only a 2.1% average salary/wage increase for 2021.
- Many baby boomers decided now is the time to retire.
There are many contributing factors to the current labor shortage in Michigan. Some of the factors existed before COVID and were only exacerbated due to the pandemic. Employers must be willing to offer flexibility when feasible and offer competitive wages and benefits in order to attract and retain talent.