Originally published on Hometown Life - June 7, 2021
There's a large shift that's underway in terms of what Michiganders are willing to do for a paycheck. Preferences have evolved and needs have changed after living through a pandemic for more than a year.
For instance, retail and hospitality workers, who have dealt with customers refusing to wear masks and the fear of contracting COVID-19 at work, are leaving that industry in droves. Some are ending up in the mortgage business.
Meanwhile, employees who have worked from home through the pandemic are realizing that as restrictions on in-person work have eased and employers are beginning to bring back employees to the workplace, they may prefer working from home.
"As we move out of this pandemic, we are all working in an environment and experiencing things that we have not experienced in the past," Susan Corbin, acting director of the Michigan Department of Labor and Economic Opportunity, said.
At the same time, there is strong demand for workers. This, with a shifting workforce, is seen all across the U.S., but it is being felt acutely in Michigan and metro Detroit, which already had a talent shortage before the pandemic, said Jack Van Tiem, vice president and market leader for Troy-based Kelly Professional & Industrial. Van Tiem oversees southeastern Michigan.
"The talent shortage was exacerbated by the pandemic, but it didn't start with the pandemic," he said.
Van Tiem said two factors went into Michigan's talent shortage: a skills mismatch, such as the need to upskill manufacturing workers as the industry is increasingly automated, and a low labor force participation rate.
The state's labor force participation rate was at 61.6% in February 2020 just before the pandemic, compared with 63.3% in the U.S. In April, that dropped even further in Michigan to 58.8%, compared with 61.7% across the country.
Michigan has had a lower labor force participation rate compared with other Midwestern states since the Great Recession decimated the automotive industry. Some of those jobs have not come back.
As more and more Michigan residents are vaccinated and pandemic restrictions are anticipated to be lifted by July, businesses are reopening and hiring to meet the strong demand from consumers for activities such as dining out and travel.
That's good news, economists and business executives say, but there's just one problem: They can't find workers.
Employers are hiring, but ...
May's jobs report released Friday showed employers added 559,000 jobs last month, an improvement over a disappointing 278,000 jobs added in April, but still considered "good but not great," said Gus Faucher, chief economist for PNC Bank. At this rate, employment won't return to its pre-recession level until mid-2023, he said.
Still, economists and government leaders are hopeful hiring will pick up in the summer months as more workers are vaccinated and feel safer going back to work.
"In September, I think we're going to be in a totally different place than we are now," said Corbin. "But I know that that's really small, small consolation for the local employer who is trying to identify and find employees so that they can keep their businesses open."
The department launched a new website Friday that centralizes many of its offerings such as an online portal for employers to connect with job seekers, the state's Work Share program, which allows employers to bring back or keep employees working for reduced hours and education tools for businesses to create a safe workplace.
While these offerings aren't new, Corbin said many employers haven't had to use them previously because they could just post an opening on a job site and it would be filled.
Leaving low wages and tips behind
Economists say this economic recovery will be led by the return of jobs in the leisure and hospitality industry, but many workers have left that industry.
In the restaurant industry, specifically, 64% of Michigan workers said they were considering leaving their job in the pandemic, significantly higher than the 53% of workers across the U.S. who said they were considering leaving. That's according to a recent report from One Fair Wage, a nonprofit that advocates for restaurant workers. The nonprofit surveyed more than 300 food service workers in Michigan from October 2020 to May.
The survey found nearly three-quarters of Michigan workers were leaving restaurant jobs because of low wages and tips.
Some of those workers are going to fast-growing industries in southeastern Michigan like the mortgage industry.
Kristin Supancich, chief people officer at Ann Arbor-based Homepoint, said there was a flood of applicants — often referred by current employees — from the retail and hospitality industries for recent mortgage jobs.
"They were learning that they could come in and actually make a base salary higher than what they could make in retail and hospitality," said Supancich. "Because of the environment last year, they had the opportunity to earn bonuses on top of their base salary."
Supancich said she had to hire 10 human resource professionals just to get through a pile of 4,000 applications at its peak.
"I was surprised because folks that never considered the mortgage industry before, they just started pouring in," she said.
A $100,000 degree and 'house poor'
Other workers, like Ellen McCartney, quit her job as a legal assistant in the pandemic after she had time to reflect on her career trajectory.
McCartney, 25, graduated from Michigan State University in 2017 with a degree from its public affairs-focused James Madison College. She bounced around the legal field after graduation but soon realized that she wouldn't be able to advance in the field if she didn't go to law school.
"At the end of the day, I realized I had this $100,000 degree from Michigan State and I'm not making a ton of money," she said. "I was like, 'Well, my options are to go to law school, get another $150,000-$200,000 in debt, spend three years of my life studying to come back to the same firm and do the same job, just for more money.' "
After giving up on that possibility, she decided to pursue a job in a STEM field, which some of her family members work in.
She ended her lease early for an apartment in Detroit because "I could not afford the rent and the lifestyle I wanted to live, I was house poor," and moved in with her parents in Grosse Ile. McCartney quit her job and within a few days started at Tech Elevator, a coding boot camp with a location in Detroit.
She completed the program virtually, because of the pandemic, and graduated in August 2020, getting a job at Ford Motor Co. as a software developer shortly after.
"There was plenty of nights where I was up until 2 a.m. at the computer, just not understanding anything and feeling like I made a big mistake and stressing out," she said.
McCartney said that leap of faith ended up putting her in a much better position, but she acknowledged that the support of her family both emotionally and financially was what made it possible.
Brad Hershbein, an economist at the Upjohn Institute for Employment Research in Kalamazoo, said some degree of retraining for the workforce, like what McCartney did, is likely going to need to happen because some of the jobs lost in the pandemic won't come back.
"There's going to be a shift in the types of jobs that are being demanded," Herschbein said. "There's going to be more emphasis on health care and research and more types of jobs that can be done remotely."
He said barriers like transportation and child care need to be resolved so that, ultimately, the state's economic recovery can be sped up.
Herschbein pointed to the state's "Futures for Frontliners” program, which provides a tuition-free pathway to college or a technical certificate to essential workers who don’t have a college degree as an example of a program that helps to eliminate barriers. In this case, it's a financial one.
Shorter commute times, free parking a priority
One area where he thinks retraining will be necessary is for people working in downtown, office-heavy environments.
"The infrastructure that exists to support them, whether it's a dry cleaner, or a restaurant or bar, many of those businesses are going to be hard-pressed to continue," Herschbein said.
That's because many businesses are finding that their employees enjoy working from home, and are finding they may not need that hip, likely expensive, downtown office.
Sincro, an automotive digital marketing company with 150 employees in Michigan, decided to permanently close its 18,000-square-foot Detroit office, and move to an office in Troy that's half the size.
Christina Rosenbach, associate vice president for Sincro in Detroit, said the company found that the majority of employees wanted an option of working from home because they felt more productive, and enjoyed saving time on the commute and saving money on lunches out.
Sincro decided on an office in Troy because it's close to where many of their employees live, it offers free parking and many other companies in the automotive industry also are located in Troy. At the new office, there'll be no assigned desks and there will be meeting spaces meant for collaboration and training.
'Better father, husband and employee'
Steve Jenkins, a people and change practice lead for the consulting firm Centric, advises companies on how to shift to a hybrid workplace and keep employees connected to the company.
The consulting firm, which just opened an office in Detroit, has gotten an increase in clients coming to them in the pandemic to explore offering a work-from-home option permanently, both to potentially save money on real estate and to keep and attract talent who may prefer remote work, Jenkins said.
"All of a sudden there's a value proposition for some companies to explore going to a hybrid model," he said.
That's an option David Gifford would have preferred. Gifford, a purchasing manager for the automotive supplier KTX America and the founder of Transit Guide, a guide on how to use the bus systems in metro Detroit, has mostly worked from home since the start of the pandemic.
Gifford lives in Warren and has to leave at 7:30 a.m. to drive to Livonia if he goes to the office and doesn't get home until 5:30 p.m.; taking the bus would add at least another hour to his commute. He said he would prefer a mix of both working from home and the office.
The biggest lesson Gifford learned from working at home was how much more flexibility parents who stay home with their kids have. For example, his wife could go to a doctor's appointment while he stayed home with their child and worked.
"I was able to help her live and get normal things done that everyone does," Gifford said.
Van Tiem said he has seen an increasing number of companies in southeastern Michigan offer a hybrid work option as a way to retain talent and attract workers who prefer that option.
Can't rebuild better unless everyone participates
But hybrid work isn't an option for all employees or companies. Van Tiem said another perk he has seen employers offer is increasing wages.
Corbin said anecdotally she has seen this, but the limited data that's available shows the average hourly wages in the private sector in Michigan only rose 98 cents per hour, a 3.6% increase for the 12-month period ending in March. Because of inflation, this increase was much lower in real terms, she said.
Many employers point to more generous unemployment benefits as the reason for their hiring struggles. Corbin said this isn't the case.
Throughout the pandemic, the majority of claimants have gone back to work before they exhausted their benefits, for an average of 14 weeks, or just over three months.
She noted that 23% of claimants are on traditional unemployment insurance benefits, while 77% are claiming benefits from federal programs, meaning they are contract workers or are self-employed.
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Jane Oates, the president of WorkingNation, a national nonprofit campaign that raises awareness about the challenges facing the U.S. workforce, said workers who wouldn't typically be eligible for benefits aren't sure what to do for employment. For example, a worker who drove for Uber may not want to return to driving and lose their eligibility for benefits if they know they won't get as many rides as they would in pre-pandemic times.
Oates noted returning to work is particularly challenging for women, who may not have sufficient child care options, and people of color, who were disproportionately affected by the pandemic.
"This is the most dangerous thing we have right now," Oates said. "We can't rebuild back better or to where we were unless we have everybody participating."
To learn more about Tech Elevator, please visit techelevator.com