On Main Street in Memphis, small businesses are strapped by a labor shortage

MEMPHIS, Tenn. -- In some ways, this city of 650,000 is back. The clubs on Beale Street are packed again. It’s hard to get a table at some restaurants. And folks are lining up for tickets at Graceland.

But the longer waits, frustrated customers and “Help Wanted” signs on store fronts across downtown are a reminder that the pandemic labor shortage persists even as the recovery has sped up, with the U.S. economy adding 943,000 jobs in July amid surging hiring and wages.

A record 10 million jobs are vacant and many workers remain on the sidelines, making do on their unemployment benefits and pandemic relief checks, struggling to find child care, and worrying about the rapidly spreading delta variant preying on the vulnerable and vaccine-resistant.

“People left the labor market in droves during the pandemic and they’re not coming back,” said economist Marianne Wanamaker, a University of Tennessee professor, noting that the country’s labor force participation rate has been stagnant at 61%. “We are way behind the predicted employment recovery.”

One muggy day on Main Street in Memphis, the recovery pains were evident: In a corner coffee shop, the owner struggled to find workers to cover shifts and has lost thousands of dollars in work for his other business -- a limousine service -- because he can’t afford to hire additional drivers and a dispatcher. The owner of the deli has pressed family members into helping keep the place open. And a sign hanging in the window of a darkened Subway sandwich shop read: “Due to a shortage of employees, we are temporarily closed for a week. Sorry for the inconvenience.”

“I’m begging, honestly,” said Farhat Othmani, the coffee shop owner, about his search for employees. He’s even tried to persuade some of his regular customers to take a spin as a barista, promising “Cash tips daily!” and “Set Weekly Schedule!” on a sign outside.

In pre-pandemic days, Othmani, 56, could afford to be choosy when he hired for his limousine service or his coffee shop in downtown Memphis.

“I was very picky believe it or not,” he said. “If someone wasn’t happy or has an attitude I’d be, ‘Next!’”

During the early days of the pandemic, Othmani, a Tunisian immigrant, saw his limousine business dry up completely, and after his two coffee shop employees said they preferred to stay home, he opened up the coffee shop on his own, sometimes bringing in less than $40 or $60 a day.

“I never accepted stay home. I never accepted do not open. Honestly I went with the attitude that I will die of covid rather than die hungry,” he said.

These days, customers have returned to his quirky shop named after the Arabic word for coffee, with works by local artists on the walls and chess players lingering at tables. But his struggle to find workers is coming at a huge cost.

Before the pandemic, he had 14 limos and six drivers. Now he has eight limos and no drivers except for himself and his wife, Sandie. He had to say no to driving pilots back and forth to the airport for a FedEx contractor that would have netted him more than $3,000 a week because he can’t find a dispatcher and two more drivers.

The worst is when regular customers call him from the airport looking for rides because they can’t get an Uber or Lyft, which have been in short supply this summer, and he’s not able to help them. It’s hard not to get discouraged.

“That’s the beauty of this country; the harder you work, the more successful you get,” Othmani said. “But now I feel like it’s a dead end.”

At the start of the pandemic in February last year, Tennessee had an estimated 3.2 million workers in non-farm jobs. That number plummeted drastically during the first few months of the pandemic, with 380,000 fewer people working. By this June, 64,000 workers still hadn’t returned to a job, according to the Tennessee Department of Labor and Workforce Development.

Analysts say the reason is complicated: Workers want remote jobs and less of a commute, jobs shifted to industries such as warehousing that might not be nearby, and workers could afford to be choosy and hold out for higher wages during a period of historic government aid.

Others simply charted new careers or life pathways after so many months of enforced solitude.

One of Othmani’s baristas, Kirk Stevens, quit his job midway through the pandemic. He is living part time in a houseboat on a Nashville lake and making 30 to 40% more working remotely in customer service for an organic dog food company, he said.

“I’ve moved into one of the best jobs I’ve ever had,” he said. “The situation in covid actually ended up leading to some of the best opportunities I’ve had in my life.”

Wanda Russell, 56, keeps a grueling schedule to juggle her career as a Memphis police officer and the owner of Wrapzody Gourmet Wrapz, the deli that she has owned since 2008. For years, she has worked the midnight shift at the police department, then put in a full day at the restaurant. She manages to catch a bit of sleep in the evenings before the cycle begins again.

During the worst months of the pandemic, she had to work even harder because she had to lay off three members of her small staff and had to run the kitchen herself. But when more customers began returning to her downtown spot - a cheerful red-and-white restaurant centered around a white baby grand piano - she couldn’t find anybody to rehire. Some of those who scheduled interviews as a condition of their unemployment benefits never showed up.

“It’s tough out here,” she said. “Business has picked up but people are not willing to work. Nobody’s applying for jobs.”

To get by, she turned to family members, enlisting her 25-year-old son and college student niece to help alongside her daughter and her 85-year-old father, Joe Yates, who already were working for her.

In a competitive market where many restaurants are upping wages, she raised everybody’s hourly pay by $3 - moving staff from $9 to $12 an hour or $11 to $14 an hour - because, she said, “I couldn’t afford to lose anybody else.” She had to raise her menu prices on sandwiches to cover the additional labor cost, she said.

She also hired a college student from Christian Brothers University to do marketing to improve the deli’s branding and foot traffic but also to expand its pool of potential workers to nearby college campuses.

“We would like to hire, but it’s about finding employees that want to work,” Russell said.

The summer throngs of people have found their way back to Willie Moore’s Family Restaurant, lining up every day to get their ham hocks, turnip greens and sweet potato pie, cafeteria-style, at his soul food institution along the trolley line in the heart of downtown.

Moore, 72, is a well-known figure in the city from his long years in the restaurant industry and his days as a student civil rights activist - “Everybody loves Willie Moore!” he says, “I’m a tourist attraction myself.” These days, the photo of Moore marching with the Rev. Martin Luther King Jr. shares space on the front door with a perennial “Help Wanted” sign - a testament to Moore’s difficulty finding extra staff.

Moore, whose son manages the restaurant, doesn’t have trouble enlisting family members to help if he needs it, but his search for others often takes many weeks.

“It’s hard as hell right now,” Moore said. “People don’t want to work. Why would you work for $8 an hour when you can freelance and make more money to go with your government subsidy?”

Tennessee was one of about half the states that did away with the extra $300-a-week federal pandemic unemployment assistance, hoping the cutoff would bring those on the sidelines back into the workforce. Yet many are still receiving state unemployment benefits and remain on the sidelines. This summer, eligible families began receiving federal child tax credits that will amount to hundreds of dollars per month for some.”It’s not that people are lazy, it’s that they don’t want to do a minimum-wage job when they can live on the government subsidy,” Moore said. “I don’t blame them. It’s just common sense.”

Labor force analysts had once predicted that students’ return to classes would bring more parents back to the workplace and lessen the burden on employers, but the fast-spreading delta variant has quashed those hopes, according to Dotty Summerfield Giusti, chair of the Small Business Council for the Greater Memphis Chamber. Covid-19 cases and hospitalizations are rising rapidly, and only about 41% of Tennesseans are fully vaccinated, lower than the rest of the nation. All of these factors could hamper the country’s needed return to recovery, analysts said.

“There’s an enormous amount of uncertainty,” Giusti said. “It’s a vicious kind of cycle right now.”

Along North Main Street in Memphis, business owners remain caught in that cycle every day.