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Where Have The Workers Gone?

Valley companies pivot, offer more benefits to attract employees amid continued labor shortages
Posted on September 03, 2021
By Michael McDaniel, Contributing writer, Phoenix Business Journal

Phoenix Business Journal

When he was furloughed in March of last year because of the Covid-19 pandemic, Ian Moore felt like he was losing more than just money.

“All those people I've worked with, they're not just my coworkers, they're really legit my family,” said Moore, 25, a former bartender at Postino WineCafe in Tempe. “That was the hardest part for me. I couldn't see anyone.”

Moore always felt awkward growing up, he said. He had a speech impediment during his youth that stunted his development. Moore also is dyslexic, so finding an occupation that didn't require intensive reading and provided him a social outlet was everything to him.

He briefly thought about finding other work during the pandemic, but figured the risk was too great for his family. His father, who he lived with at the time, is 62 and has high blood pressure and stomach ailments. This caused Moore, a self-described social butterfly, to become a recluse overnight to protect his father.

When Postino’s parent company Upward Projects called him back from the furlough two months later in May, he jumped at the chance to work for the company he missed.

Upward Projects was fortunate to regain a worker already familiar with its business in an industry that is critically understaffed.

An analysis by the Phoenix Business Journal found workers prized workplaces that had cultures of respect, competitive wages, coaching, cross-training, benefits and trained leaders. Those organizations fared better at retaining talent amid unemployment, meeting demands for worker benefits, and increasing micro-entrepreneurship.

Offering these extra incentives could be key as the Valley — and the rest of the nation — faces a labor shortage that is hitting the restaurant, retail and hospitality industries especially hard.

Arizona had 181,000 open positions across all industries as of March 2021, the most recent data available from the U.S. Bureau of Labor Statistics. That's a 40% jump from March 2020.

What workers are wanting

According to the Center for the Future of Arizona, a nonpartisan nonprofit that combines research with collaborative partnerships, less than 50% of workers polled last year were satisfied with their employer’s ability to provide education and training to advance their career, or to explore higher paying prospects.

The survey was conducted by Gallup from August to October of 2020. Gallup received responses from 3,586 adults in Arizona through mail and web surveys.

Traditionally, the thought of providing education to workers was considered a disincentive to retail retention efforts, if not too costly. However, recent efforts have shown companies are willing to spend more on education in the effort to improve worker satisfaction.

Last December, Starbucks announced an updated partnership with Arizona State University to provide free tuition for Starbucks employees. Military veterans under the program can extend the benefits to their family.

In July, Walmart followed suit by announcing it will pay the full cost of college tuition and books for 1.5 million full and part-time employees.

“I think that this is a huge opportunity that we have with what's going on in the workplace right now, it's given us a blank sheet of paper to reinvent how we do things our employee’s experience,” said Lauren Bailey, CEO of Upward Projects and Moore’s top boss.

Bailey, who is also on the board of the ASU Foundation, believes education or training is important because her employees have expressed interest. Like Starbucks, she hopes to provide similar benefits to her employees from her ASU partner.

“We've been polling our staff, and you know that's something that they want so if that matters to them, it matters to us,” Bailey said. “I think that's what we, as a smaller business, have to be tasked with, is to understand what our employees want and what's important to them, and then find creative ways to fill that. It’s really not that complicated.”

Upward Projects provides opportunities for workers to grow in fields of training, management, and other aspects of retail. The restaurant group owns Postino, Windsor, Churn, Federal Pizza and Joyride.

Sybil Francis, CEO for the Center for the Future of Arizona, said there are, or should be, opportunities for frontline retail workers to get trained in other areas of the industry such as in management and human resources. Even an hour or two a week in an administrative or unrelated field would do a lot to broaden an employee’s upward prospects, she said.

According to the Center for the Future of Arizona, 46% of low-income (less than $60,000 a year) workers surveyed feel like they have training or educational opportunities at their disposal. While 62% of workers making more than $60,000 felt that opportunity was present.

“The big thing that leapt out at us, was the lack of education and training opportunities to grow a career,” Francis said.

The divide in those surveyed is even greater when they were asked about benefits like health insurance and retirement. Only 40% of low-income workers surveyed believed they had sufficient benefits, whereas 62% of workers that made over $60,000 a year felt satisfied with their benefits.

Workers are prioritizing themselves when businesses wouldn’t

At the start of the Covid-19 pandemic, waitress McKenzie Williams got sick with Covid-like symptoms. One sick day turned into a few days.

“I really don't think it's legal to work with these symptoms, serving drinks, and it isn't,” Wilkins said to her boss in March of 2020.

Next thing she knew, she was terminated.

“They claimed that I threatened to take them to court, and that was 100% not what I meant with that statement,” said Wilkins, who asked that her former employer not be named. “I honest to God meant nothing at all about suing them or taking them to court.”

She described her previous employer as demanding. Despite that, she said she was recognized multiple times for her hard work, making her termination all the more painful.

“Like, it was considered going home early if you had just worked 10 hours,” Wilkins said. “It was considered a short shift. A lot of us, and I, would do it too, like, 10 days in a row.”

Because of the ongoing pandemic, Wilkins said she wasn’t immediately able to find gig work or retail/food service work.

Luckily, her partner Aaron had the means to help support her during the pandemic. Wilkins filed for unemployment, but because of a backlog of unemployment claims statewide, she didn’t immediately receive help.

Wilkins wrote her congressman, Rep. Greg Stanton, Gov. Doug Ducey and even then-President Donald Trump looking for support after she was fired. The process took months. Eventually she was able to get backpay in the neighborhood of $8,000 to help supplement her income.

The unemployment money did help her though. She used some of the cash to start breeding rabbits to help supplement her income.

“I am still working on the rabbit project faithfully, also job hunting,” Wilkins said. “Staying stagnant for too long tends to eat me alive.”

Where have all the workers gone?

Kate Winkler, the CEO of Ruby, a U.S.-based virtual receptionist service, said she’s seen abnormal trends in her 18 years of providing staffing but nothing like she has seen during the pandemic.

She said turnover for the firm's hourly workforce has been consistent for many years, until January 2021, when the extension of the $600 in extra federal unemployment benefits was passed. After that, turnover started to double, she said.

The increase in turnover wasn't from workers thinking they could quit because of the extra unemployment dollars, Winkler said. It was being they were struggling emotionally and needed a break. That same shift also caused more workers to seek remote work positions, she said.

Francis from the Center for the Future of Arizona also believes a life reprioritization may have contributed to a worker shortage.

“It's possible that Covid certainly gave people the opportunity to think about what's important to them,” Francis said. “Unemployment benefits may have made some difference, but I think it's much more complicated.”

Side hustles were born

Through the height of the pandemic the U.S. Census Bureau reported an unprecedented growth in new businesses or "side hustles" as people like Wilkins tried to survive. Through November of 2020, more than 82,000 business applications were filed, an increase of 16% over the same timeframe in 2019. The increase is a jump that hasn’t been seen in over a decade.

The surge in business applications coincided with an uptick of unemployment in Arizona. Unemployment shot up from 4.5% in February 2020 to 13.4% in April of that year, according to the U.S. Bureau of Labor Statistics. In July 2021, the Arizona unemployment rate was 6.6%.

However, the fact was, Wilkins dreaded going back to work because her experiences as a waitress and gig worker.

Francis said the unpredictability of work schedules in the retail and restaurant industry and the difficulty of securing child care for last-minute shifts also contributed to workers not wanting to return to these types of jobs.

Those conditions were only multiplied by the risk of contracting Covid-19. For Wilkins, her side-hustle was more of a necessity in a world where health care and employer reliability was in question.

A focus on culture

Even though he was furloughed from Postino in early 2020, Moore saw an outpouring of support from his then-former employer.

The company started “tips for team" program, where a portion of tip proceeds went to employees who found themselves out of work. In addition, furloughed employees had the opportunity, each day, to receive meals from the company.

“It was not just for me specifically, it could have been for my pops or for my whole family, you know, they want to make sure we were good,” Moore said. “Obviously that was such a difficult time for some people. So, you know, the fact that these do those little things really does stands out.”

Upward Projects' Bailey said the efforts ended up helping the company regain valuable talent and business.

“We had about 85% of our teams returned to the restaurants. We were staying in constant contact with our teams about what they were doing and how they needed help,” Bailey said. “And I think that led for us, a higher return rate than most people.”

Brian Evans, the CEO of Café Valley, a Phoenix-based producer of baked goods for stores and restaurants, said he’s invested $7.2 million to combat labor shortages while competing with Inc. for Valley workers.

To survive, he said he established a fast-track promotional program where workers can start with Cafe Valley earning $15 an hour, but within a year, they can earn $21 an hour. A six-month supervisor training program, which would allow workers to make $60,000 to $80,000 a year, also is available.

In a similar track as to what Cafe Valley offers, Moore said Upward Projects gave him the opportunity to work at a Denver location of Postino. The opportunity to make new friends and grow into a leadership role was a prospect he simply could not pass up, he said.

Moore moved into an apartment in downtown Denver in late July, where he doesn’t have to worry about passing a Covid variant to his family.

“I can't even say how much I appreciate Upward Projects, and most importantly all the support we got because it comes down to, if we didn't have the support of our community, and a lot of our vendors and stuff like that, it wouldn't have worked,” Moore said. “That just really shows us that we're not just numbers, that we really matter. That this whole company is one big team.”