The Beveridge Curve: Why Jobs Are Going Unfilled

The Beveridge Curve

The pandemic caused a lot of headaches for economists using conventional wisdom to counter the effects of a scarcity of labor and an abundance of job openings. 

After visiting New York recently, a colleague told me he noticed firsthand that local restaurants were in dire need of help. “I ordered Buffalo Wild Wings at 6p and I was told my order would not be ready until 9:30pm.” 

Low-Wage Labor Shortages Span Industries

The shortage of low-wage workers is not confined to the restaurant industry. A study by re­searchers Gi­an-luca Vi­olante at Prince­ton University and Ay­segul Sahin at the Uni­ver­sity of Texas at Austin found that the num­ber of job va­can­cies exceeded the num­ber of un­em­ployed peo­ple with ex­pe­ri­ence in whole­saling, foodser­vice, the en­ter­tainment sec­tor, and healthcare.

There are a number of reasons unskilled jobs in foodservice, for example, are going unfilled, among those being the regional displacement of workers, the increase in delivery (Uber, DoorDash) demand and therefore opportunities to work remotely, stimulus checks, COVID-19 concerns, childcare assistance and pent-up demand that outstripped the labor supply.

The Wall Street Journal cited a re­cent Zip­Recruiter sur­vey that found 70 percent of job seek­ers who last worked in the leisure and hos­pi­tality in­dus­try are now look­ing for work in a dif­fer­ent in­dus­try. In ad­di­tion, an April sur­vey of U.S. work­ers who lost jobs in the pan­demic, conducted by the Fed­eral Re­serve Bank of Dal­las, found that 30.9% didn’t want to re­turn to their old jobs, up from 19.8% last July.

High Skilled Positions Are Scarce

What makes this recovery also remarkable and different is that higher skilled workers are finding it challenging to find openings. In our industry, foodservice marketing, insights and events positions at the corporate level are rare and only the uber-qualified are earning the coveted spots. 

Like frontline foodservice workers, business professionals are reconsidering career options post-pandemic by making industry changes, waiting on the sidelines until stimulus money runs out and moving from urban areas to suburban and rural areas as remote work has boosted the desire for quality of life.

The Beveridge Curve

The mismatch between job openings and the unemployment rate is in fact not new. Economists found in 2008 the same issue. Conventional reason dictates that as un­em­ployment rises, job open­ings fall be­cause em­ploy­ers have an abun­dance of work­ers to choose from. 

Fall­ing un­em­ploy­ment, on the other hand, is as­so­ci­ated with a large num­ber of open­ings. Econ­o­mists plot this re­la­tion­ship in a chart called the “Bev­eridge Curve,” named af­ter British econ­omist William Bev­eridge who stud­ied the dif­fi­culties of match­ing work­ers to jobs in the 1930s and 1940s.

The Covid State of Mind

In the context of restaurant employment, most of us have seen or heard about restaurants paying applicants to complete an application or increasing the pay of existing workers to an extent unheard of prior to the pandemic. Yet, operators tell us there is more at play here, which we refer to as the “Covid State.” 

The Covid State seems to be a way of thinking by employees or staffers in the front lines of consumer-facing businesses that either neglect or refuse to complete assigned tasks for fear of infection. 

An operator close to FSIP said workers who continued to staff her quick-service chain put limits on wiping down tables, delivering food to waiting customers and taking out the trash. “These are some of the issues we face with the limited staff we have, not to mention the problems we have with recruiting.” 

Problems like the Covid State not only hinder service, but put employers in a tough spot of what to demand of staffers while ensuring they don’t quit.

Equilibrium Will Eventually Arrive

Although we’re coming out of the pandemic, it’s going to take more time for the Covid State to wane and the Beveridge Curve to again become relevant. And whether or not it does to its full extent is still in question as employers across industries attempt to determine how best to lure new and satisfy existing workers, while the unemployed continue to ponder their next move. 

Tim Powell is a Managing Principal of Foodservice IP. Tim serves as a trusted foodservice adviser to management at several food companies.

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