Labor crunch gives Kansas City workers leverage as employers scramble to find workers

When Cathy Cowan walked into a downtown Kansas City job fair on Thursday, she was shocked to find Municipal Auditorium nearly empty of candidates.

Forty-five hospitality businesses from across Kansas City had set up tables. But the restaurants and hotels looking for workers far outnumbered the handful of potential candidates that milled about.

“This is totally different than any job fair I’ve been to in Kansas City,” Cowan said.

This mismatch is becoming increasingly common here and across the United States as employers struggle to find and retain workers in the wake of the coronavirus pandemic.

Cowan came to the job fair searching for a job in food service or event planning. Like countless others, the pandemic caused her to reevaluate her priorities in where she worked. She left a job in marketing to pursue something that ignited her passion while allowing more time for her family — and, of course, paid her a decent wage.

She dismissed the idea that unemployment benefits were pushing people out of the workforce. Really, it’s that people are more concerned than ever before about quality of life, she said.

“I think people just want to be able to work a job where they’re respected, that gives them a pay that they can live on and be able to support and enjoy their families,” she said.

The current labor market means workers like Cowan can afford to be picky.

While employers furloughed and laid off millions of workers last spring at the outset of the pandemic, they are now scrounging for talent. The labor crunch has hit nearly every industry, though service and retail employers are particularly struggling.

“The balance of power has shifted toward the workers,” said Frank Lenk, economist at the Mid-America Regional Council. “Demand has snapped back faster than supply.”

The shortage has put employees in the enviable position to demand higher wages, better benefits and hours.

In the professional world, counter offers are increasingly common: one local recruiter recounted the story of a worker who’s salary went up nearly $20,000 in a day as two employers competed for her.

Nebraska Furniture Mart last week announced it would raise wages for all of its warehouse workers. The Omaha-based chain said existing staff would receive a pay hike of at least 9% with starting pay for new warehouse workers now ranging from $18.30 to $22.77 per hour.

Restaurants across the area have had to cut hours and postpone new openings as their inability to find staff increases customer wait times.

Many of those who left the workforce through the pandemic have yet to return. And now with consumer confidence rising, many are emboldened to quit existing jobs or switch careers entirely.

“That’s actually a sign of labor market health that people feel confident enough to quit. The labor market is actually healing,” Lenk said. “In some sense, this is to be expected, but that doesn’t mean employers aren’t having trouble finding the workers they want at the price they want to pay.”

Competition pushing wages up

Lenk said many of the available jobs in the region tend to be in low-paying sectors.

“Most people want that stable, relatively decent paying job that’s full time,” he said. “So if those were being offered, people would jump at those. But if those are not being offered, people are going to wait and see what else they may be offered.”

In April 2020, nearly 150,000 workers across the Kansas City area were unemployed, according to the Bureau of Labor Statistics. But those numbers have consistently decreased as the economy has rebounded. This April, fewer than 48,000 people were unemployed locally.

Likewise, the unemployment rate for the Kansas City metro area has plummeted from a high of 13.2 % last April to 4.1 % this April.

But many people are still on the sidelines. Virtual schooling created childcare challenges for many families and the pandemic prompted many Baby Boomers to retire.

Conservative lawmakers have pushed for an end to the enhanced unemployment benefits provided by the federal government to help displaced workers. Politicians and businesses have said the extra $300 a week in unemployment checks deterred people from returning to work.

Missouri Gov. Mike Parson withdrew the state from that program early, causing workers to lose those benefits after June 12. In Kansas, those benefits are available until early September.

Lenk thinks the $300 per week could have persuaded some workers to stay home. But it doesn’t explain the entire labor shortage.

“It also tells you that the economy is kind of hooked on having access to a very low-wage workforce,” he said, “if ($300) is all it takes for people to decide whether they want to go back to work or not.”

Like many others, the Independence School District is finding it hard to hire support staff like bus drivers and paraprofessionals.

For bus drivers, the district provides all training in house for those with commercial drivers licenses. The full-time positions include benefits and wages have recently increased to a minimum of $15.79 per hour.

The school board also recently approved a new employee benefit that covers 75% of childcare cost for full-time workers.

But longtime Superintendent Dale Herl said he still needs to find 18 drivers before school starts in the fall. Across Independence, the district has covered parked buses with signs advertising the openings and a new $1,000 signing bonuses for drivers.

“It’s always a tough position to fill, but we’ve always been able to fill them in the past,” Herl said. “This has been the most challenging hiring period that I’ve experienced since I’ve been superintendent.”

Workers rethink priorities

When Ramiro Murillo was searching for a job at the beginning of the year, he had trouble finding positions in his field of hospitality.

He picked up a retail job. But, feeling overworked and underpaid, he decided to explore his options in the wide open job market.

“(I’m looking for) something that I enjoy doing, something that I don’t have anxiety when I have to go in, something that I can make connections with other people, and also something that pays well,” Murillo said.

Many low-wage workers don’t want to return to the same menial hourly jobs as before. The pandemic allowed many to reconsider their options and find other opportunities.

“A lot of people were forced to say, ‘What’s my passion in life? What do I really want to do? What are my choices?’” said Pat Sullivan, vice president of HR for the Raphael Hotel. “And they’ve gotten on with their lives and lasted so long, and most people have found a different choice than what they were doing originally, so they aren’t coming back.”

That shift in priorities is forcing businesses to reconsider what they offer workers, whether that’s better pay, better benefits or a better work environment.

“I think you have to be on your Ps and Qs as a business, because there’s not as many people as we have a need for and they gravitate toward the businesses that treat them well,” Sullivan said. “We need to be one of those businesses.”

It’s not just service sectors that are struggling to find workers.

Aside from retirements and career changes, Overland Park-based staffing firm Morgan Hunter has seen many corporate professionals launch their own businesses or move to freelance work during the pandemic. The problem was exacerbated as many companies held back on filling positions last year during the pandemic.

But Morgan Hunter, which specializes in human resources, accounting and IT, can’t fully explain the shortage of candidates.

“Overall we’re still trying to scratch our heads to see where these people are,” said Carol Schmidt, a senior director for the human resources recruitment team. “We’ve done this for 25 years and we’ve never seen the market like this.”

She likens it to the frenzied real estate market, where prices are skyrocketing as home buyers outnumber sellers.

“We call it a candidate’s market,” she said. “It is a good time to look because there’s plenty of jobs to choose from and you might get in a bidding war.”

One recent Morgan Hunter recruit was earning $57,000 as a payroll administrator. That worker was offered a salary of $70,000 elsewhere. The job offer prompted her current employer to raise her salary to $75,000 and offer a $7,000 bonus to stay.

With the changing power dynamics, employers now must work to stand out in a crowded field. Candidates increasingly care about company culture and work-life balance, Schmidt said. And many want the option to work from home at least some of the time.

The labor market requires employers to act fast and many have to lower expectations. For instance, a job that’s posted as requiring several years of experience may be filled by a recent college graduate.

“A big one is to move quickly in the hiring process,” Schmidt said. “The days when I wanted to interview 10 people and pick the best one — that just doesn’t happen because candidates have multiple options now.”

A small pool of candidates

A search of all the jobs posted on Missouri’s online job board returns 1,000 pages of results.

In Jackson County, where nearly 20,000 positions are posted, there are more than twice as many job openings as candidates to fill them.

The story is the same across the state line in Kansas, where the number of new job postings has been increasing by about 2% every week. Last week, there were more than 52,000 openings posted in the Sunflower State.

But the pool of candidates is hardly keeping up, said Mike Beene, director of employment services for the Kansas Department of Commerce.

“It’s all sectors of the economy that are needing talent,” he said.

While this environment is driving wages up, Beene said higher pay isn’t the only answer to finding workers. He said employers need to help overcome obstacles like childcare and transportation challenges. And flexibility is key to wooing back those whose lives were upturned by the pandemic.

“There’s not one thing I can point at for why people may have left the labor market,” Beene said. “There’s just so many factors.”

The shallow labor pool can threaten a business’ ability to meet basic customer demands. For restaurants, it might mean losing money by turning diners away or providing a poor experience that convinces guests to not return.

So far, customer satisfaction hasn’t dropped much at Lenexa-based Westlake Ace Hardware, but the chain of hardware stores is finding it hard to hire everyone from entry-level cashiers to managers.

“It’s definitely more challenging now than in my 22 years in human resources,” said Curt Hoy, senior director of human resources. “But with that said, we’re still seeking and able to find top talent and always looking to add more.”

Westlake, the largest retailer of the national Ace cooperative brand, employs nearly 4,000 people across the country, including about 625 in the Kansas City metro area, where it has 27 retail stores and its headquarters operation.

With hardware and home improvement items in high demand through 2020, Westlake never decreased its employee headcount, but actually hired more staff during the pandemic. Coy said the company is currently looking for about 250 workers across its 12-state footprint. Like other brands, it has increased pay to stay competitive.

With so many jobs open, many companies are struggling to attract initial applicants. But even when they apply, it can be hard to keep them in the pipeline.

Grace Frofunga, human resources coordinator for food delivery service Menufy, said prospective employees are sometimes swept up by other employers faster than she can schedule an interview.

“We get candidates applying all the time. It’s just the responding aspect that comes in where it’s a little difficult,” Frofunga said. “It takes a while for candidates to respond, sometimes you get ghosted, sometimes they do respond but then they don’t show up to the actual interview. It’s been rough.”