Don Cunningham: Service Sector Workers Are in Short Supply

By Don Cunningham on June 18, 2021

This column, written by LVEDC President & CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on June 18, 2021. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

I grew up in the 1970s in a neighborhood with a father who always “knew a guy.”

If you needed a clutch fixed, a carpet installed, or a patio poured, there was always someone who knew how to do it.

And, if the beer was cold, they were always available.

There was no Yelp, no Facebook and no one would think of venturing into the open market. That would cost too much.

Because if you could do it yourself, or if you knew a guy, you never paid someone to do it.

In the blue-collar world of steelworkers and tradesmen, that included a lot of things.

Changing oil, fixing brakes and clutches, finishing a basement, installing an above-ground pool, building a patio, pouring a sidewalk, painting, basic house wiring, and, of course, cutting grass and washing a car.

I often was made to participate. The intent was for me to learn how to do it. I spent an entire Saturday in the driveway lying under a car during a clutch change retrieving wrenches, beers and getting yelled at for not paying attention.

Today, I go to the dealership for repairs and Jiffy Lube for an oil change.

I also pay a guy to cut my grass.

I was taught well, but I learned very little.

In fairness, there’s been a fundamental shift in society and the economy toward service jobs.

My family didn’t believe in paying people to prepare your meal and serve you food. Restaurants were for special occasions — birthdays or anniversaries — and only a few times a year. Mixed drinks at a bar were an extravagance.

Only the wealthy or people with the means could pay others to do things for them.

Today, much of our economy is based on people of all income levels paying other people to do things for them that theoretically they could do themselves.

So much so, that there’s a mini crisis right now because there’s both a shortage of workers available to do things for us and pent-up demand after more than a year of being locked up during the pandemic.

Try finding landscapers to do backyard improvements or someone to install appliances or build a shelf. Forget about getting a pool this summer. There are restaurants that can’t reopen, and service levels have slipped at some because of a worker shortage.

The balance of power has shifted. The cost of labor and services has increased.

All those guys my dad knew who spent a Saturday doing a clutch job for a six-pack of Milwaukee’s Best are now making bank.

There are also more low-skilled jobs now requiring only a high school diploma that pay $20 an hour and include benefits. It’s not a mystery why someone wouldn’t want to landscape all day in the heat for $10 an hour or work at the diner for $2.83 per hour plus the tips on a $12 breakfast.

In the supply and demand equation, workers are in demand.

There’s no doubt that at the lower end of the wage scale, the generous and extended unemployment benefits of the pandemic are playing a role. Human nature leans to doing nothing instead of something if the pay is the same.

That will end by September or sooner.

It won’t, however, end the challenge of employers — or households — finding workers. There is a much larger issue at play with much larger consequences in the decades to come.

America’s population is not growing fast enough. At the same time, federal policy and public attitudes have turned against immigration, even though all of us who live here, unless we’re of Native American descent, came from somewhere else.

In the end, it’s just math.

A growing economy creating new jobs and fewer people to work will result in an imbalance.

The horizon is even more troubling.

The U.S. fertility rate hit a record low in 2020. The total fertility rate — the number of babies a woman is projected to have — fell to 1.64, the lowest since tracking began in the 1930s. The natural growth of the U.S. population — births minus deaths — last year was just 0.4% or about 677,000 people, according to the U.S. Census Populations Estimates Program.

Immigration also reached a 10-year low, adding just 477,029 people.

At the same time, the number of workers exiting the workforce and retiring is growing. In the 1980s, the U.S. had about five workers paying taxes to support each retiree on Social Security and Medicare. Today, it’s 2.8 workers per retiree. The federal government estimates it will be 2.2 workers per retiree by 2035.

This is a crisis for another column.

The Lehigh Valley’s growth rate mirrors the U.S. but is more driven by immigration and domestic migration. Since 2013, more people have died each year in Northampton County than were born. Last year, population grew 0.3% to a total of 676,694 people in Lehigh and Northampton counties. The growth came from about 1,500 people immigrating or migrating, and just 416 people from natural growth.

The region’s situation is tremendous compared to Pennsylvania as a whole. The state lost 0.1% population; 9,500 more people died than were born, 20,854 people migrated out, and only 14,523 immigrants were welcomed in, the lowest in a decade.

The translation: Even after pandemic benefits end, there will be fewer workers available to serve you in the future and they will cost more. Convenience only comes two ways — through technology or paying people to do things for you.

Doing it yourself, “knowing a guy” and cooking your own meals is likely to be more necessary again in the future.

I wish I’d paid more attention to my dad and his buddies.

Anyone have a lawn mower for sale?

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