ODU economy expert discusses the region’s recovery and the local service industry staffing shortage
By Melissa Stewart
Old Dominion University’s Dragas Center for Economic Analysis and Policy recently published a mid-year study predicting a GDP (gross domestic product) growth of 4.8% for Coastal Virginia in 2021. Vinod Agarwal, director of ODU’s Economic Forecasting Project, says the region is showing strong signs of economic recovery post COVID-19.
But what about the state of the hospitality industry? How is a staffing shortage affecting an area that’s reliant on reliable employees, particularly during tourist season?
We asked Agarwal about his take on the issue, reasons for the problem (beyond extended unemployment benefits) and what local businesses can do to survive the problem of finding good help.
CoVa BIZ: Overall, how is the local economy doing at this point?
Vinod Agarwal: If you were to look at the three major sectors of the economy—the Department of Defense, tourism and the Port—they’re all doing very well. The job market is somewhere staggered. We simply have not been able to create as many jobs as they would like to see. But the job market here in this area has always been slower to recover.
An abundance of jobs seem to be available at local hotels, restaurants, etc. What is the reason for the staffing shortage at these businesses?
There are several reasons for this. The operators of hotels and restaurants will focus on only one aspect of the problem, which is extending the unemployment benefits. There is no question that extended unemployment benefits have kept some employees away from the jobs. To what extent it is not very clear, but this is one of the reasons for shortages in this industry.
Can you talk about some of the other reasons?
Every summer we used to have lots of seasonal workers from overseas, and they’re simply not here. During the Trump administration, he had put some restrictions on the issuance of H-1B visas, and the pandemic has not helped because many of the US embassies are simply closed. Also, there are restrictions on international travel.
Another reason is if you were to look at the labor force statistics for the nation, you'll find a lot of women, a much greater proportion, have left the labor force. Most of the workers who lost jobs were hourly wage workers. And women are an interesting aspect to deal with in this case because a lot of women had to leave jobs, and possibly drop out of the labor force, to be able to take care of kids. A lot of individuals, especially in low-wage industries and also dealing with kids, are having second thoughts about whether working is worth it.
All this is tough, particularly during a time when people just want to get out and do things again.
Yes, people are tired of staying at home. So demand for leisure and travel has increased significantly. I can also say that we did not anticipate we’d reach near full levels as early as we did. So many of these establishments were not even prepared for this comeback so quickly. They wanted it, but they were not prepared.
So, what is your best advice for businesses affected by these problems?
If employers need these workers, guess what they have to do? They have to pay them more. Wages have to go up. They have to give them more flexibility for work hours and incentives; they need to start thinking about these workers and their families. You have to think of them no longer as a number. You’ve got to start thinking of them as if they're part of your family.
How can potential employees help the situation?
These expanded employment benefits will never last forever. So they also should be interested in looking for better jobs. We know expanded unemployment benefits will disappear in the first week of September. So we have to start thinking right now, not in September.