Come Memorial Day weekend, Steve Pastusak, general manager of Jolly Roger Amusements, in Ocean City, Maryland will be thrilled as ever to have his regular flow of guests back at the company’s four amusement parks, which include boardwalk rides, a water park, and the largest go-kart facility on the east coast.
But now Pastusak and thousands of other beach town businesses are facing a new challenge, a worker shortage.
Beach town hotels and restaurants were barely able to keep their lights on as they saw just a fraction of the usual 8 million visitors they expect each summer. Now a lack of seasonal workers threatens to derail what beach towns hope will be a bounce-back summer.
Beach towns on the DelMarVa peninsula are now clamoring for seasonal workers, and businesses that a year ago were fighting to survive are now fighting to find the employees who will let them keep up with the crowd.
“It really is the perfect storm of why so many are in this spot”, says Pastusak. Ocean City employers attribute the side effects of a pandemic that upended beach town’s traditional models of employment. Foreign workers on visas like H2B and J-1 student visas are not available at normal levels, as a result of the pandemic. Additionally many out of work collecting unemployment are less incentivized to give up those benefits for a seasonal job they know will end in September.
Ocean City is just a microcosm of the pain that beach towns everywhere are experiencing in a post-pandemic economy. The sector of tourism-dependent regions was crushed last summer by the fear of COVID-19, and the capacity limits put in place intended to slow the spread. A year later consumer demand is stronger than ever but the workforce to meet it is barren. Part of which can be attributed to the tricky position of the extension of federal unemployment benefits.
“The tourism industry and towns dependent on cashing in on the summer months are the ones bound to take the biggest hit, because of the unemployment benefits,” says James Knightly, Chief International Economist with ING Financial Markets. Those benefits are available to anyone who has been out of work as far back as last summer. “They are going to have to pay up given that these positions offer the same personal income timeline as unemployment benefits,” says Knightly.
The theory some have is that the incentive for workers who traditionally venture to the beach to work in the summer has been greatly reduced, with the current benefits structure allowing them to collect benefits while looking for more permanent employment past Labor Day when both the benefits end and the need for workers drop off.
Many small business owners are calling for an end to enhanced unemployment benefits in order to encourage workers to come back.
“People seem like they have been given every incentive to not work, to ask someone to take a seasonal job and give up their payments for not working, is a huge ask”, says Susan Jones, executive director of the Ocean City Hotel and Restaurant Association.
But incentivizing Americans to return to work would only for many larger employers like hotels and amusement parks. The lack of foreign workers that typically migrate to Ocean City each summer is gone as well. “We are severely understaffed as of right now,” said Pastusak, whose theme parks employ over 500 workers in a typical summer, 250 of which worked on J-1 visa.
Like many amusement parks on the east coast, Jolly Rogers relies heavily on these workers because they typically require less training and have the necessary certifications. This year will see a significant dropoff in J-1 workers, as foreign embassies from nations that send many of these workers are currently restricting their residents from coming to the US this summer.
So Jolly Roger’s has pushed hard to attract a workforce hailing from area high schools and students home from school this summer. “I feel like we have been to every local high school and college job fair that we could go to,” says Pastusak. Students are a key focus for many given their relative flexibility during the summer. “
We have upped our advertising budget more than ever, higher wages, the subsidized housing we provide is available” while also providing career training to a workforce which Pastusak realizes may be working their first job ever. Still, students are just one piece of the puzzle. Most students are unable to work jobs with significant training or experience required.
Signs of this labor shortage conflicted with the latest jobs report. April’s job numbers were a disappointment with a meager net gain of 266,000 jobs in an economy that was supposed to be roaring back, but the strongest gains were seen in the hospitality & leisure industry with 331,000 jobs added. Those gains are expected to continue in May, as more Americans get vaccinated and are willing to travel.
In April new entrant unemployment spiked, causing concerns about young people and recent graduates’ ability to find work. It is not a willingness problem either, as new entrants are not able to collect unemployment benefits when they have never been unemployed.
Wages, not unemployment benefits, will be preventing businesses from hiring students and new entrants, a demographic that makes up a significant amount of the OCMD season workforce. Many businesses are raising wages to beat out their competitors for talent. “Businesses this summer understand they must pay a competitive wage to find staff,” says Jones.
She believes that the onus around the country has been put on businesses to up their game and offer better wages but with OCMD’s current wage regulations, the businesses should be able to field more talent. “We have small businesses who paid minimum wage two years ago, and now offer $15-20 an hour,” says Jones.
Nick Giancola is one of them, he operates multiple mini golf locations in Ocean City and neighboring Delaware beach towns. His staff typically is mostly students either in high school or college. “Young people want money, it’s their driving motivation to work,” said Giancola. He has upped his wages from previous summers and recruited staff members, siblings and friends to work for the course.
“This job doesn’t have the upside of tips or other bonuses that the restaurants provide, so you have to make up the difference.” By selling the idea of living down the beach in the summer while working a relatively easy job, he now has four of his six locations fully staffed and expects to be ready by Memorial Day.
Another challenge for small businesses is competing with large corporate chains for the same pool of workers. “We have a lot of both and they have an equal share of the market here, those larger chains have the corporate backing to pay more,” said Jones. Recently both McDonald’s and Chipotle announced they were raising wages nationally, set to take effect immediately. To counter small businesses have tried to advertise signing bonuses along with the flexibility many larger chains are unable to provide.
If businesses are unable to attract more workers the customers will suffer. “You will see longer wait times, raised prices, you could even see reduced hours,” says Jones. Ultimately as Memorial Day gets closer businesses will not have a choice but to continue to up their wages.
After a disastrous 2020, these small businesses do not have much room to gamble on operating expenses eating into their profits. But that is the bet many will need to make in order to attract the staff needed to make up for the losses of last year.