Tuesday, July 23, 2024

A help wanted sign at Oak Bistro in Cambridge’s Inman Square on Wednesday. (Photo: Julia Levine)

While walking and driving around Cambridge’s dense business areas, “Now Hiring” and “Help Wanted” signs are visible in many of the storefronts of local businesses.

From leadership of the business advocacy group Cambridge Local First, we can confirm this is a growing issue. Over the past few years, more businesses have asked us for help with finding employees, and we’ve pursued a range of interventions. But the staffing shortages remain.

Why are businesses struggling to fill these roles? Our research shows that the answer is complicated.

On the one hand, Cambridge’s unemployment rate has remained steady at around 2.5 percent over the past 15 months – down significantly from the mid-pandemic peak of 8.1 percent but much greater than the 1.7 percent of February 2020. That means Cambridge is experiencing a “labor shortage” when, by our analysis, nearly 2,000 residents are looking for work.

Our research suggests a few key themes:

Lower-wage jobs are the most affected. Part of the shortage can be explained by the types of jobs experiencing the biggest shortages: lower-wage roles with limited benefits and physically demanding work conditions. Statistically, the sectors that have experienced the largest decrease in workers are leisure and hospitality, whose workforce is down 17 percent, and education and health services, down 6.1 percent. Given the range of industries that the shortage has affected, and the resulting job openings, low-wage employees also have more choices than they have had in the past. Mark Lamphier, manager of the Harvard Book Store, noted that while the shop has been able to recruit qualified workers due to the store’s name and reputation, “applicants have a lot of choices, and other potential employers can pay more.”

The pandemic was a turning point for many low-wage workers. Some saw their jobs vanish instantly with the shutdown of restaurants, entertainment venues and retailers. Others faced being labeled “essential workers” who had to risk their health by working in person, but were barely paid enough to cover their own essentials. The pandemic soured many low-wage workers’ views on the state of their industry, in some cases leading them to change industries or return to school in search of higher pay. The expansion of federal benefits and unemployment during Covid facilitated this trend, allowing workers the free time and savings to seek out more secure jobs or start their own business. Additionally, many older workers decided to accelerate their retirement  rather than work through the pandemic.

Michael Kanter, owner and co-founder of Cambridge Naturals in Porter Square, said that despite the store’s above-average pay and benefits, hiring and retaining retail employees in the wake of the pandemic was an “incredible challenge.” Product shortages, social distancing and an in-store customer limit had some disgruntled customers taking out their frustrations on employees. “We train our employees to not worry about those customers because it isn’t personal, but that really rattled staff,” Kanter said.

Additionally, many employees were rightfully wary of working customer-facing jobs during a pandemic. A common thought among workers was “what are we doing here working at a retail store when other people are working at home?” Kanter said. He saw a number of employees move back in with parents, search for jobs that pay more money or return to school.

We’re vulnerable to rising living costs. The cost of living in Cambridge and the rest of Greater Boston is another reason low-wage workers are in such high demand.

Many of the workers who would take these jobs simply can’t afford to live in the area – or the employers most in need of workers either can’t or won’t pay employees enough to cover the local cost of living. Working full time at Massachusetts’ minimum wage would net an employee $31,200 annually, or $2,600 a month pretax, without health insurance or paid vacation.

Given that the minimum wage is consistent across the state, its earners cannot afford to live and work in Cambridge where average rent for a one-bedroom apartment is nearly $3,000, and might relocate to one of many lower-cost areas where they can find a job for the same pay.

For some groups of people, such as parents of young children without college degrees, the downsides of a job outside the home can quickly outweigh whatever compensation they get. The average of care per child in Middlesex County is $26,000 annually, more than a full-time minimum-wage employee’s net income.

Immigration changes hit hard. Changes in immigration in recent years have allowed in fewer seasonal workers, a critical labor force during the summer. Many of the other reasons for labor shortages are particularly relevant for seasonal workers, for whom the costs of travel and temporary housing often don’t outweigh the higher pay compared with that of their hometown or country.

Many seasonal jobs are left to be filled by students on summer break, who are less willing to work long hours over the summer and can be less dependable than seasonal immigrant workers. Though Harvard Book Store has hired seasonal workers in the past, Lamphier reported a common theme among them. “Reliably,” Lamphier said, some “ want to leave two weeks sooner than they initially told you they would.”

Ultimately, the the Organisation for Economic Co-operation and Development said, “the pandemic particularly affected employment in a number of services sectors where immigrants are largely overrepresented.”

While traditionally “low-skilled” industry employers have been affected the most by a lack of workers, there is evidence that suggests this trend may soon have an effect on industries typically requiring college degrees. A MassInc study in 2022 foresees steep declines in Massachusetts’ working-age, college-educated population, predicting a drop of nearly 200,000 by 2030.

If this trend continues and nothing is done to retain and encourage lower-skilled workers, the future of the food, hospitality and other service industries looks bleak. For customers, staffing shortages mean longer lines, shorter hours and higher prices. City residents, government and employers across all industries have a common interest in supporting local lower-wage workers, but existing efforts appear inadequate.

Complicating this dynamic is an underway artificial intelligence revolution. Increasingly, businesses are integrating AI systems into their business operations. There is the concern that the increasing automation of jobs through these technologies can lead to job losses in certain sectors, particularly in jobs that involve routine, repetitive tasks. The impact of integrating AI into businesses remains to be seen.

Theodora M. Skeadas is executive director of Cambridge Local First. Sam Newman is a CLF researcher.