'Supply and demand': Workforce shortages cause Northwest Florida wages to skyrocket
Florida voters approved a plan last November to incrementally increase the state's minimum wage from $8.56 to $15 an hour by 2026.
Although business owners generally opposed the idea at the time, a year later, many of them find themselves paying well over the $10 hourly wage taking effect Sept. 30. In fact, many already are offering $15 or more to anyone willing to work.
"Like everything else, it's supply and demand," said Shane Moody, president and CEO of the Destin Chamber of Commerce. "Right now, in this area, you can get a job working just about any place you want to for more than you have been able to make for the same job in the past."
Although the entire nation is grappling with labor shortages, Northwest Florida's tourism-driven economy has been hit particularly hard. A year ago, many restaurateurs, hoteliers and retailers were befuddled at the notion that a fresh-faced 16-year-old would be able to walk in off the street and collect a $15 hourly salary.
Today, many of those same businesses are not only offering elevated wages, but also signing bonuses, enhanced benefits packages and other hiring incentives to woo workers. The wage increase that was the cause of so much consternation a year ago may now just be the cost of doing business.
"The labor force is really small," Moody said. "So some businesses are now paying $18 an hour to come in and flip burgers. It's the nature of the beast."
Has a change in demographics contributed to the workforce shortage?
So why is the workforce so diminished?
There are any number of theories as to why, although many of them revolve in some way around the COVID-19 pandemic.
Many business owners suspect that people are choosing to stay home to collect unemployment and stimulus checks rather than work. Some people suggest that workers are avoiding public-facing jobs to reduce the risk of exposing themselves or their families to COVID. Others posit that the shortage of workers is a direct fallout of more than 650,000 Americans dying of COVID.
Nicole Gislason, executive director of the University of West Florida's Haas Center, said she sees the labor shortage, both regionally and nationally, as being rooted in demographics.
As part of her work at the Haas Center, Gislason helps track and research employment trends in Northwest Florida.
Gislason said much of the service industry workforce is comprised of millennials ages 25 to 40, many of whom are now getting married, buying houses and having children. As a result, they're looking for careers with 401k plans, good health care benefits and child care.
"Millennials who were previously waiting tables and (working as) line cooks and sales clerks, now they're moving into maybe work-from-home situations, or they're moving into jobs that provide a little bit more stability," Gislason said.
She said on the opposite end of the spectrum, the baby boomer generation is aging out of the workforce.
"They're no longer seeking employment because they have earned a comfortable retirement and they took the last year to re-evaluate their situation or maybe just step away completely," Gislason said. "These two things came together around the same time, and that's why you're seeing such a shortage."
An employee-driven market
Jim Howe, vice president of workforce solutions for Landrum HR, said hospitality employers like restaurants and hotels are the most hard hit in the Pensacola metro area, with 2,500 to 3,000 fewer workers in that field today compared to this time last year.
"I would say that most companies are struggling to hire today, and I think you can see that anywhere you go in our community," Howe said.
Area social media groups centered on job postings for service industry professionals frequently have businesses posting multiple positions at a time, and they now list added incentives like signing bonuses, flexible shifts and sometimes health insurance benefits that they didn’t before.
"It truly is much more of an employee-driven market today than it's ever been, and there's more opportunities for employees to leverage up their skills into a better paying job or to get flexibility to work from home and other options," Howe said. "There's a whole lot of different dynamics that's really a challenge for most employers to navigate through."
Pam VanNess, owner of Sabai Thai restaurant in downtown Pensacola, said she has openings in just about every position other than management right now. Most of the applicants she's seeing are those with backgrounds in office or manufacturing environments who are wanting to change careers, she said.
"We are looking for the best of the best, but while we offer a good wage, we don't offer health benefits just yet because we're still a new company. We're looking to add that to our second-year plan to stay competitive," she said.
Other similar restaurants are offering competitive wages and benefits that VanNess said can be hard to keep up with, and once someone starts the job, it can be difficult to keep them. She said working in a fast-paced kitchen environment can be difficult as is, and throughout the pandemic, it has become harder to find people willing to come to work when they have other options that let them stay home for similar pay.
Howe said he expects both the pandemic's shift in the labor market and the increasing of Florida's minimum wage during the next few years to cause wage compression in which the entry-level employees are making more money, which will cause the employees who were already making $15 an hour to request more to compensate.
He said the businesses that are likely to get ahead in the coming years as the minimum wage slowly increases are the ones that offer competitive wages but also put work into employee retention.
"There's two phases to the employee experience. There's the attraction phase, which is getting someone attracted enough to apply, and that's when your big salary or maybe benefits and sign-on bonuses will come in," Howe said. "But once you have an employee, it's about how do you engage with that person, how do you become an employer of choice? And that has to do with company culture."
Fast-food companies like Chick-fil-A and Whataburger already offer close to $15 an hour in starting wages, Howe said, so he doesn't believe the minimum wage will be as big an issue as the plethora of opportunities a job seeker has now.
"That level of engagement with the current employees is so key to success going forward. You can put a lot of emphasis on hiring and adding people, but if you're only adding people because you're losing people to other opportunities, your business isn't moving forward," Howe said.
'You pay people what they're worth'
In Okaloosa County, Big Kahuna's Water Park returned as a focal point of Destin tourism this year following a major park upgrade. Brandon Moore, the regional operations director for its parent company, said in the early summer, offering $11 per hour and incentives at "a fun place to work" was enough to draw job applicants.
As the summer wore on, park managers increased the wage to $12 an hour, Moore said, and as the summer came to a close, "noticed that (the market) turned into a wage competition with several businesses in Destin."
"At Big Kahuna's we strive to pay a competitive wage for our team members," Moore said in an email. "Going into the 2022 season, we are already debating having our starting wage for all team members at $15 an hour."
Blake Dailey, who owns Adventure Stays in Panama City Beach and is working to reopen the former Gibson Inn in Fort Walton Beach as a bed and breakfast, said he's paying employees "high teens up to $20."
"All of our employees are making above what the Florida minimum wage would be. Our goal is to get good people and keep them. It takes a team to run these things," Dailey said. "If you're paying on the low end, they'll just keep recycling, keep jumping. We want them to stay. That's what we're trying to do."
Dave Trepanier, owner of Firefly restaurant in Panama City Beach, said he is "absolutely" paying his employees more this year than he did in 2020, adding that "at the end of the day, my feeling is you pay people what they're worth. The minimum wage number is bothersome, but at the end of the day I pay people what they're worth, and if they don't like it they can go work somewhere else.”
Trepanier noted that his current labor issues are less about quantity of job candidates and more about quality.
"To have somebody walk in the door at 15 years old or 16 years old, whether they want to be a hostess, a bus boy or whatever they want to be, that's where we get hurt," Trepanier said. "Most of the cooks are already making $15 an hour. Most of your skilled people are already making that now."
Trepanier said the minimum wage was never set up to be a living wage, it was meant for entry-level employees living at home and working first-time jobs.
"To me, that's the job you get when you're in high school. ... A 15-year-old that lives at home shouldn't have to make $15 an hour," he said. "Now, if she's worth $15 an hour and the value is there, then 100%, anybody would pay it.
"The problem is, once you give that 15-year-old $15 an hour, what's the guy that has been back in the kitchen for 10 years who is skilled at his craft, what's he worth now?” Trepanier asked rhetorically. "What's he going to want? $20, $21, $22? Now, what about the guy that is more skilled and advanced than him that has been doing this for 10 or 12 years?"
Trepanier said the wage inflation "will absolutely have a negative affect on the business and all small businesses. I'll be able to weather the storm better than most, but a lot of restaurants or small businesses won't be able to do that."
Higher and higher wages
Florida was among the more than two dozen states that sought an early cutoff of an extra $300 in federal unemployment assistance that the U.S. government extended to out-of-work Americans to help them weather the COVID-19 pandemic.
Asked if the federal government efforts to sustain the unemployed had counteracted the intent of Florida raising the minimum wage, David Goetsch, an economist, college administrator and author, answered with "an unqualified yes."
"From an economist's point of view, I wouldn't mind because it's market driven, not the government," Goetsch said. "But the government is continuing to impact the market because it's paying people not to work."
Goetsch said he does not anticipate the federal government will extend unemployment compensation when the program currently in place expires this month, but it still remains to be seen how many people who have been receiving checks for an extended period of time will rush to get back into the job market.
"What we've learned from worker's compensation is that you get people back to work as soon as possible, even if you've got an executive emptying garbage cans," he said. "Because the longer people stay home, the more they get used to staying at home, and a lot of people have gotten used to being at home for a long time. So we've got to ask, 'What's it going to take to get people back to work?' "
Gislason, from the Haas Center, said there are two ways to help shore up the workforce. One is to tap into the "hidden" labor force that's currently sitting on the sidelines.
She said people might be choosing not to work because they are a military spouse or because they have a criminal record or a substance use disorder, but regardless of the reason, we should seek ways to attract them into suitable positions.
"To the extent we can harness our social safety net to get them back into employment, it benefits all of us to have them earning a wage and becoming productive citizens again," Gislason said.
Longer term, Gislason said, we have to find ways to ensure employees can afford to live in the places where they work.
"Locally, one of the challenges we face is a relatively high cost of living. That's putting pressure on wages, too. I can't emphasize that enough," she said.
"If you're having to live in Holmes County and commute to a job in South Walton, No. 1, that's a really long commute, but there's also a cost to that commute: there's a time cost, you're paying more in child care, you also pay more in fuel," Gislason said. "So that's a real problem. We need to have some affordable housing in and around our service jobs on the coast, and until we get that you're just gonna see higher and higher wages."
For now, Gislason said the range of wages paid now are likely to become the new normal, even after the pandemic.
"The wages won't go back down. Now, your entry level wages may, yeah, but you're not going to be able to pay Sally, who's earning $16 an hour now, $15 an hour next year. I don't see that happening."