CARES And Competition For Labor
By Jay Singh, Chairman, NCASEF, President, San Antonio FOA
Franchisees enduring the front lines of the COVID-19 pandemic are under great pressure these days by the labor market. Unemployment claims have increased so much that we have permanent help wanted signs in our windows and we still can’t find people to work our stores. I personally just worked four hours of the morning shift in one of my stores, and then later went back to work the graveyard shift in another store. Never in my 23 years in this business have I seen a labor market so tight and so lacking in people wanting to work.
Part of this is due to the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), the $2.2 trillion economic stimulus bill passed by Congress and signed into law by President Trump in March 2020 in response to the economic fallout of COVID-19. In light of the reduction in economic activity due to the pandemic, CARES provided needed relief to many sectors, including supporting funds for healthcare providers, manufacturers and distributors; economic stabilization funds for businesses, states, and municipalities; the small business loan program called the Paycheck Protection Program (PPP); and Small Business Administration Economic Injury Disaster Loans to cover nonprofit and faith-based organizations.
CARES relief to individuals included tax rebates, credits and deductions, namely $2,400 to each married couple filing jointly or $1,200 to each individual and $500 for each dependent under the age of 17. Yet by far, the most critical factor directly affecting our labor needs was the Federal Pandemic Unemployment Compensation (FPUC), which was an additional $600 per week for all individuals receiving unemployment benefits (for 15 weeks), and the Pandemic Emergency Unemployment Compensation (PEUC), which extended unemployment benefits for 13 weeks for all those who would have otherwise exhausted their unemployment payments.
We would by no means begrudge any of these benefits to individuals qualified to receive them, but this is one of the largest contributing factors to folks not looking for work in our stores. Why work 30 or 40 or more hours, when you can stay home and get paid more for not working at all? A typical worker making $11-12 per hour might make $380 to $480 per week, and receive half that on unemployment, yet when we add the $600 FPUC payment, they definitely make more than when they were working. We also can add in the $1,200 to each individual. This is compounded by the fact that all an employee has to do to be put on unemployment is cite “fear” of infection as the factor why he or she cannot be at work. Under this system, all our employees could potentially qualify for unemployment benefits.
Even before the pandemic hiring store associates was competitive, not just for the best employees, but for any qualified employee. In January 2020, Walmart raised their minimum wage from $11 to $12, and since the pandemic Walmart and Target have both raised their minimum wage to $15. Amazon drivers make $15 an hour and more.
On 7-hub there is a site set up by 7-Eleven, Inc. called Hire Right, which can help franchisees and corporate stores get staff from within 4-5 miles of their store. There are some other sites we can use, as well. Due to the pandemic, and fear of infection on the part of potential candidates, these resources are not bringing appropriate help to our stores, and it is getting worse day-by-day. Thus far, partisans in the House and the Senate have stalled an additional stimulus package, but they are definitely thinking about another one. It is an election year, and both political parties are counting on more support from workers and positioning themselves as big-time help for the middle class. Unemployment claims are skyrocketing.
Even when my FC urges me to try names from the corporate employment data, most of the potential candidates when contacted do not answer, and when they do get back to us, fear is cited as the major factor to not wanting to work in our stores. So incentives and easy unemployment claims during COVID-19 have robbed us of any chance to quick and easy hiring. I’m not saying to take away the incentives, because we want our average customer to have success in their life and money in their pocket to spend, but I am saying, “That’s just the way it is.” Franchisees clearly need relief and more help from corporate the longer the pandemic continues. Perhaps Congress should consider a resolution to pay incentives to people who do work at least 30 hours a week.
I am confident that if we are patient through these tough times, eventually things will improve. Stay well, and stay safe everyone.