“I don’t know if we’ll ever get back to normal:” Michigan small businesses try to strike the right balance as pandemic persists
Sharon Juergens said being a small business owner during the COVID-19 pandemic is all about resilience and coping.
Diamond chef and managing partner Jim Brady’s in Novi is, like many other Michigan independent small business owners, finding new and creative ways to adapt to unknown and unpredictable circumstances, especially since the variant Delta is setting in, cases are on the rise and people are starting to worry. again for their health and safety.
Juergens said small businesses continue to face multiple challenges that are different from the start of the pandemic, including issues of hiring and retaining workers. She also mentioned problems with the supply chain and rising wholesale food prices, which are beyond the control of companies.
“The unknown is the biggest problem for me,” she said. “I mean, there’s just a level of stress. We don’t know if the pandemic will recede and if there will be other stops. Staffing is an issue for the industry as a whole. I see it as a long term problem. It’s always super difficult. It’s just not that normal. I don’t know if we’ll ever get back to normal.
The state’s leisure and hospitality sector has been very slow to rebound with 391,200 workers employed statewide in July, still down from July 2019 when the number totaled 460,900 workers.
To attract more workers, she raised wages like many other small businesses, but was fortunate enough to lose only one employee in the kitchen who left for another job with advancement. She used most of the $ 100,000 in federal aid she received to pay salaries and overhead.
Compared with March 2020, salaries were on average 6.5% higher in March 2021 for Michigan companies with fewer than 100 employees, according to BLS data. Employment for companies with 10 to 99 employees fell by 5.4%.
For a kitchen worker the size of hers, losing an employee was “damaging.” In addition to higher wages, it also closed on Sundays and Mondays, as well as some public holidays, to help improve the quality of life for its employees and allow them to spend more time with their families.
For some restaurants, reducing hours of operation has been another way to cut costs and earn money in the face of rising food prices, especially meat.
“We also learned that quality of life matters a lot,” she said. “People always talk about wages as the only problem, but I think catering is difficult for your quality of life. During the pandemic, I think a lot of people learned that they didn’t want to give up on these things and I think they realized the value of that paycheck. “
In Oakland County, the challenge for small businesses continues to improve retention and attraction of talent.
Jennifer Llewellyn, county workforce development manager, said the county’s rate of economic recovery will be different depending on which business owner you talk to.
“We’ve talked to so many companies, big and small, and the lineup is absolutely amazing,” she said. “Some small businesses said they’ve never had a better year. On the other hand, a restaurant owner said that if he didn’t start recruiting additional staff, he would have to shut down. It depends on the industry.
Between January and March, the county’s total employment rose from 668,279 to 679,595, an increase of 1.6%. The number is still below 732,300 in March 2019 and 733,300 in March 2020.
Companies that have received state and federal support while creating innovative and creative business models have thrived, said Llewellyn, whose staff, available talent, health and safety concerns and costs are hitting the wall. hard business.
“These were pain points before the pandemic, but they were only painful for certain professions and industries,” she said. “Now these are pain points for everyone and because it hurts everyone it’s much more of a topic of conversation.”
In October, the county will host a forum in Pontiac on the restaurant industry and how employers can be creative in finding and retaining talent to avoid costly employee turnover.
Statewide, hiring and retaining workers and increasing product costs are the biggest challenges small business owners currently face, as restrictions imposed by the state in case pandemic have expired. It is now up to individual business owners to decide how best to navigate this pandemic for themselves, their employees and their customers.
According to data from the Bureau of Labor Statistics (BLS), employment is increasing in all industries in Michigan, but remains below pre-pandemic levels. As of July 2021, statewide employment stood at 4,487,565 while the labor force stood at 4,715,003. Both figures are down from 2019 by around 5.4% and 4.8% respectively.
Brian Calley, president of the Small Business Association of Michigan, said the lack of available employees statewide, rising costs and supply chain disruptions continue to be the biggest challenges facing the the state’s small business community is facing.
He believes it’s important for businesses to prioritize and balance staffing levels and hours to ensure they can continue to provide high-level service when they are open. He added that companies shouldn’t try to overdo it with the employees they have, which could lead to burnout.
“There is not much to ask of workers,” he said. “Tensions are higher and customer service is more difficult than in the past. There is a trepidation in trying to stretch your staff too much, even if they wish, to ensure that companies don’t create an environment where there is a great incentive to go out and find something easier to do. .
The state’s labor force participation rate, the percentage of Michigan’s population that is employed or actively seeking work, was 59% in July, up from 62% in July 2019. The problem is not the problem. number of jobs available, which stood at 1.1 million nationwide. in July, an increase from the 713,700 jobs available in July 2019, but the slow entry into the labor market and the number of departures.
In July, 397,700 American workers left their jobs, the highest for any month since at least December 2000, according to the BLS. The number of hires made stands at 666,700 nationwide.
For someone who oversees an organization with 28,000 members of small businesses, Calley describes the economic recovery as patchy, with some industries rebounding better than others. He said it would be like that for a while.
The professional and business services and construction industries have recovered well, Calley said, but the smaller retail, entertainment and hospitality industries have not been so fortunate in terms of numbers of jobs recovered.
From July 2019 to July 2020, the state’s professional and commercial services lost 64,600 workers, from 643,400 to 578,800. In July 2021, there were 621,800 workers.
Michigan’s construction workforce stood at 188,000 in July 2021, more than 2,000 from July 2019 levels.
“The vertical line of business has a lot to do with the recovery rate,” he said. “In manufacturing, it’s really about the issue of disrupting components of the supply chain. In the hotel industry, it is about being comfortable enough to go out. These are challenges that in many ways are beyond the control of business owners, the recovery process having been all the more difficult… Some industries have fully recovered and others are not even close.
While statewide pandemic restrictions on capacity, hours and masks have been lifted, giving business owners the freedom to respond to the pandemic however they want, it is these external challenges outside of their control which have been very frustrating for many business owners across all industries.
Industries that rely on face-to-face contact for their success are more struggling than others and surrounded by more uncertainty. This includes retail, dining, accommodation and entertainment that were the last to reopen and the last to bring back employees in person.
Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association (MRLA), said companies were trying to meet customer demand before the pandemic with 100,000 fewer workers as labor prices of work and products are skyrocketing. He added that these persistent challenges are just as or more severe than during the early stages of the pandemic.
In August, the MRLA released the results of a state-wide investigation of the hospitality industry nearly two months after the state-wide COVID-19 restrictions were lifted.
“Just under 90% of full-service restaurant operators reported closing early in the day due to insufficient staff to meet demand,” Winslow said. “Restaurants just can’t find workers, no matter how much they pay and what other incentives they offer to meet that demand. I think burnout is very real and that’s why you see reduced hours. “
While restaurants are doing what they can to survive for the short term, including increasing wages to attract workers, cutting hours, and cutting menu items, these are not “long-term success strategies.” term ”.
“When the restrictions were gone, (restaurants) had to capitalize on this demand that was there, so they paid people absurd amounts to make sure they were staffed in unsustainable ways. Now that we have passed the peak of the summer wave, your overhead costs now exceed your ability to generate income and you are in a dangerous situation.
The report also found that 9 out of 10 Michigan restaurants and almost all hotels are under-staffed to meet consumer demand.
“Even for restaurants that have good sales, how are they doing in terms of profit margins?” He said. “Because profitability was a real challenge. Even the most successful restaurants in terms of customers struggled with profitability. “