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August 24, 2021

Va.’s pandemic job market: Where have workers gone?

Virginia Mercury Photos/Ned Oliver
Rhonda Rankin, longtime manager of the Texas Inn in Lynchburg, fills a carryout order during a busy lunch shift. She’s been unable to hire enough employees to fully staff the restaurant since shutdowns last year
After more than a decade as a line cook at the Texas Inn, Jacob Johns prefers his new job at a vape shop.
“You’ve taken away any incentive to work,” Dave Saunders, an advertising executive who bought the Texas Inn in 2018, says of the enhanced unemployment benefits.
The hardest thing is, we had to be the mask police. Do you know how many times we got cussed out? Quite a few.
— Rhonda Rankin, Texas Inn manager
By Ned Oliver
The Virginia Mercury

LYNCHBURG — The Texas Inn sits at the end of Main Street in Lynchburg, an 86-year-old beacon for late-night drunk food with a menu centered around a Depression-era chili recipe and a grease-laden sandwich known as the Cheesy Western.

And for more than a decade, you could find Jacob Johns happily working the flat-top grill behind the 15-seat counter — a job he loved, until, amid a historic pandemic, he realized he didn’t.

“Nighttime would be fun as hell,” said the 27-year-old, who started working at the restaurant alongside his mom as a teenager. “I remember singing Queen songs on the damn bar with drunk people. And I love stuff like that. There’s no other natural endorphins than being able to make somebody smile.”

Like hundreds of other restaurants around the state, the Texas Inn closed when the pandemic hit. And like hundreds of other restaurants around the state, when it finally set about reopening, it found many of its former employees weren’t exactly keen on returning.

The impasse has led to headlines about worker shortages, promises of big bonuses for new hires and bitter, partisan debates over enhanced unemployment benefits, which many low-wage employers blame for their ongoing staffing problems.

Among those reluctant former employees is Mr. Johns, who has refused repeated job offers from the Texas Inn. At first, he wasn’t sure it was safe and worried working over a hot grill in a mask would lead to unsanitary levels of sweat. And in either case, they were only offering him part-time work, which he says would have cut his income by more than half.

Now he says he realized the job just wasn’t for him. He’s found a new counter to work behind at a busy vape and pipe shop where he had long been a customer as an unabashed marijuana enthusiast.

For a man whose only serious friction at the Texas Inn came from his penchant for smoking pot in the parking lot, it is a dream job and, he hopes, a springboard into the burgeoning legal marijuana industry.

“They asked me, ‘Do you want to sell bowls and bongs?’ I said, ‘Hell yeah!’,” Mr. Johns said.

He says he has no plans to return to the Texas Inn, even after its manager recently offered him $4-an-hour more than he’s making at the vape shop.

“I’m 10 times happier and 100 times more stress free.”

‘They can sit home and get paid and not bust a grape’

Lynchburg is a city of 79,000 people nestled in the foothills of the Blue Ridge. And the Cheesy Western is a scrambled egg cooked with a generous ladle of oil served over a beef patty, slice of American and relish.

A former advance man for the Ringling Brothers Circus brought the city and the sandwich together in 1935 when he opened the business as the Texas Tavern.

The restaurant is now owned by another kind of promoter, Dave Saunders, an advertising executive from Richmond who bought the business in 2018 with ambitions to franchise the concept. Mr. Saunders says his foray into the restaurant world was both fun and profitable until the pandemic hit.

Crammed into what was once a gas station, the tiny restaurant is poorly suited to social distancing. And the clientele hasn’t been entirely receptive to precautions like mask mandates, which Saunders said led to a lifetime ban for one regular who let loose a stream of abusive language at a server who attempted to enforce emergency health regulations.

But as restrictions were lifted this summer and customers once again began filling the counter, Mr. Saunders said a new problem emerged: He couldn’t find enough employees to fully reopen. The restaurant started trying to ramp back up in earnest in July, but Mr. Saunders said staff shortages made it impossible to stay open seven days a week, let alone keep the late-night hours that cemented the Texas Inn’s status as a local institution.

In addition to employees like Mr. Johns refusing to return, Mr. Saunders and longtime Texas Inn manager Rhonda Rankin said they struggled to attract new hires, even after raising wages for line cooks from $9.50 to $13.50.

Jobs they say were once easy to fill barely attracted applicants. People who did apply wouldn’t come in for interviews. People who did interview ignored the job offers that later came.

Both Mr. Saunders and Ms. Rankin place the blame squarely on enhanced and extended federal unemployment benefits, which currently provide an extra $300 a week on top of the standard state benefits. For a restaurant worker who was making $9.50 an hour before the pandemic, a job would need to offer more than $11.30 an hour at 40 hours a week to match the benefit.

“They can sit home and get paid and not bust a grape,” said Ms. Rankin.

“You’ve taken away any incentive to work,” Mr. Saunders said.

The sentiment is not unique to the management of the Texas Inn. Business groups nationwide have been railing against the expanded benefits for months. So have Republican lawmakers, who earlier this month in Virginia put forward state budget amendments that would have ended the enhanced benefits — a proposal that was roundly rejected by Democratic majorities.

Mr. Saunders says he doesn’t blame any of his would-be employees for deciding to stay on unemployment over a job that would pay less.

“I would do the exact same thing,” he says. “Why wouldn’t you?”

But he does fault the state and federal government for giving employees what he views as the choice not to work.

1.4 million job openings

The current hiring crunch is affecting a range of industries, but none more than hospitality and leisure businesses, which took the biggest hit during last year’s economic shutdowns.

Before the pandemic, restaurant employers nationwide reported 807,000 unfilled job openings. As of June this year, that number had shot up to 1.4 million, according to the U.S. Bureau of Labor statistics.

As businesses try to fill those jobs, competition between employers is fierce. In Virginia, the leisure and hospitality industry has added 46,000 new employees to payrolls since last summer, according to the Virginia Employment Commission. No category of employer has reported adding more jobs.

Economists say it’s unsurprising low-wage employers like diners are struggling to attract workers in the current climate. But unlike business owners, they doubt that enhanced unemployment benefits deserve much of the blame.

They point to studies in GOP-led states that cut off extra unemployment benefits early. While business groups expected a surge in job seekers, multiple studies have shown that any boost in employments were marginal. One recent paper found that for every eight workers who lost their benefits, one found a job.

Instead, they found overall spending dropped, suggesting the cuts could have actually hurt the economy.

Ardavan Mobasheri, an economics professor at University of Richmond who spent years in the private sector and still manages a wealth management company, said business owners forget how much federal aid programs have helped them by injecting so much cash into the economy.

“Retail sales are much higher than where they were before the pandemic,” Mr. Mobasheri said. “So if you’re not able to grab some of this spending on clothes, dinners and other stuff people are buying, then you’re doing something wrong.”

He says there is increased competition for labor, but it’s not coming from public benefits. Instead, he points to companies like Walmart, CVS and Target that have raised wages and offered better benefits, including covering college tuition for their employers.

“Why would you go work at a hot dog shop when McDonald’s is offering $14 an hour and Target is offering to pay your college tuition?”

Where have all the line cooks gone?

So if economists don’t think unemployment benefits are the primary factor in restaurant owners’ struggle to staff up, what is?

Suqin Ge, a labor economist at Virginia Tech, says the pandemic has fundamentally changed the decision making that goes into job hunting.

First, the threat of illness and death made working objectively worse. A study out of California found line cooks had the highest risk of dying during the pandemic. And then there’s new responsibilities that come with public-facing jobs.

“The hardest thing is, we had to be the mask police,” Ms. Rankin said. “Do you know how many times we got cussed out? Quite a few.”

On the other side of the equation, the pandemic made the value of staying home a lot higher for some people.

Some workers near or at the retirement age opted to go ahead and leave the labor market, Dr. Ge said. Some have decided to stay home and care for kids who aren’t in school or daycare — a category that has disproportionately impacted women, who still tend to shoulder childcare duties. Some stayed home to care for sick relatives.

And then there’s people like Mr. Johns, the Texas Inn’s longtime line cook, who followed his dreams to a local headshop.

“Maybe some people, they just say, ‘I see how uncertain this world is,’ and decided to pursue a new occupation or go back to school,” Dr. Ge said.

When he was first offered his job back, Mr. Johns said he just wasn’t ready to return given the safety concerns. And, yeah, he says, the unemployment benefits he was getting made the decision easier — but only for a few weeks.

That’s because not long after he declined the Texas Inn’s offer of part-time employment, his benefits were abruptly cut off because the business reported that he’d refused an offer to return. The Virginia Employment Commission maintains a tip line that allows business owners to report former or prospective employees who decline employment offers, triggering an end to any jobless benefits.

He says the same thing happened to other employees and it irked him, because he didn’t consider the offer of part-time employment and the salary it would provide equivalent to the job he used to hold.

He said his negative feelings for the business intensified later in the pandemic after he saw Mr. Saunders, the Texas Inn’s owner, posting on Facebook about his purchase of a luxury boat. Mr. Johns also happened to know that around the same time, the Texas Inn had been approved for a low-interest government loan aimed at helping distressed businesses.

So a few months ago when the restaurant later tried to lure him back with an offer of $14 an hour — more than he’s ever made — he said he declined.

“It just didn’t sit right, but bygones be bygones,” Mr. Johns said. “It opened a door.”

Of boats and bailouts

Mr. Saunders said his purchase of a boat had nothing to do with the Texas Inn or the $250,000 in government aid the restaurant received through federal loan programs, according to public databases.

He says the business took a $120,000 loss last year, forcing him to inject $75,000 of his own cash. As for the boat, he says his advertising business in Richmond did great during the pandemic and, anyway, he was in need of housing after a recent divorce and decided to buy a boat instead of a condo.

“People are like, ‘Dave’s rich. He’s got a boat’,” Mr. Saunders said. “Well, that’s where I live on the weekends.”

Mr. Saunders said that while he opposes continued enhanced unemployment benefits, he thinks giving aid to restaurants hurt during the pandemic makes sense because it was the government that limited their operations in the first place. “I’m happy they did it, and without that, we would not have a business,” he said.

As for benefits for workers, Mr. Saunders is aware studies have shown that ending unemployment benefits early hasn’t had the anticipated impact in the red states that have tried it. But he and Ms. Rankin say they’ve also heard directly from people they want to hire that the benefits associated with staying home are just too good to pass up.

With enhanced benefits scheduled to end in two weeks and President Joe Biden’s administration signaling it has no plans to extend them, the debate could soon be moot.

Mr. Saunders said last week he’s already seen an increase in job applications and hopes he’ll be able to bring enough people on to get back to the business’ 24-hour-a-day weekend hours.

For his part, Mr. Johns said restaurants looking for workers should think more about the way they operate their businesses. “It’s not the pay, it’s just the craziness,” he said. “It’s not the best work environment, I’ll put it to you like that.”
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