Whether it’s 1903 or 2023, the Outer Banks has always been defined in part by small numbers. That’s true in a host of ways, but none more pronounced than the labor force at the moment particularly with the summer season now clearly in view.
With another busy season ahead of us – Airbnb for example reports Dare County as the leading Airbnb provider in the state measured by revenue – the service economy will remain in vibrant demand.
That means that labor will remain at an absolute premium in a place that, in the end, manufactures experiences one person at a time.
The question many employers are wondering: Is this labor shortage a short-term thing or a long-term thing?
Critical priorities and resource allocations flow to the answer to that question, whether it’s private-sector housing buys, training and transportation plans, or simply overall service-sector compensation planning relative to a budget.
It’s tempting to think this labor dynamic is transitory–in other words, this too shall pass.
More likely, however, is this reality–of the many enduring pandemic impacts in America, one that stands out is labor force participation. Said differently, many millions of Americans departed the labor force over the pandemic and simply haven’t returned.
On top of that, demographic trends don’t suggest a return to pre-pandemic levels either nationally or locally. That suggests a structural challenge as opposed to a cyclical one–this shortage is here to stay and we’ll have to adjust accordingly.
While it will take time for the data to come in to substantiate that idea, we’re seeing it in a wide array of anecdotal situations from the so-called wage/price spiral (hence the nagging inflation challenge in our nation’s dominant service economy) to reduced hours for many service businesses.
This will be the new normal.
We see that idea in practice at the national level when monetary policy makers use personal consumption data to drive decisions on things like interest rates.
Broadly, for example, the Federal Reserve does two things–support price stability (with a 2% inflation target) and broad employment (we’re seeing virtually over-employment at the moment). Interest rates target both ideas with the two notions being related in many ways.
More locally, we see it in our service economy–workers still remain really tough to come by and that’s affecting us all in a lot of ways. Longer lines, higher prices, and so on.
Last weekend, for example, as I was waiting in line for a sandwich, I counted seventeen people in line for a sandwich and two people behind the counter making them. Fed-speak aside, that’s the new reality.
There are a lot of reasons for that–the truth is in the subtlety and nuance of individual decisions–but in the end we’re left with the idea that this change is here to stay.
On a positive note, it also means wages are higher than they’ve ever been and workers are being rewarded for their efforts at a rate that’s never been exceeded in American history.
Take a look at the percentage of new cars you see on the road around you, for example, and that’s a reflection of these wage gains.
In short, as we develop strategies for our visitor economy we’re well advised to consider the evaporating labor force, as opposed to something cyclical, as something that’s here to stay.
Strategy, in other words, suggests that we plan for it.
“Sound Strategy”, a weekly commentary from our publisher Clark Twiddy, features issues, ideas and information focused on our mission statement of “Covering the Business News of the Greater Outer Banks”.