California Gold Rush Town Typifies Labor-Shortage Plight Vexing Businesses

FOLSOM (AP) — The Hampton Inn in Folsom, California, has 147 rooms but General Manager Enid Baldock could only rent 117 of them recently because she did not have enough workers to clean them.

“I was turning people away with 30 rooms (available). Ridiculous,” she said while stuffing bedsheets down a laundry chute to help our her skeleton housekeeping staff.

At the Palladio, a nearby shopping center with 85 stores and restaurants just off a busy highway, businesses appeared more focused on attracting workers than customers as “now hiring” signs outnumbered Black Friday fliers. Mac, a cosmetic retailer, was advertising a $1,500 bonus for anyone who would agree to work full time.

Businesses struggled to get through the Great Recession more than a decade ago with minimal staff because low demand forced them to lay off workers. But the opposite is playing out in the pandemic, this time with lots of demand but fewer workers willing to return following government-imposed lockdowns.

Experts point to a number of factors, including the high cost of child care, more generous government benefits and lifestyle changes that have made workers less willing to accept the salaries and conditions of their old jobs. That has pushed up wages for some retail and restaurant jobs, but not enough to overcome the gap.

“It changes people’s behavior the longer that COVID persists,” said Roy Kim, deputy director for workforce development with the Sacramento Employment and Training Agency. “The longer people can survive and make adjustments that way, it becomes life altering.”

The labor shortage has played out in surprising ways across California, the nation’s most populous state with nearly 40 million residents that, were it an independent nation, would have the fifth largest economy in the world.

Folsom, an affluent suburb of Sacramento, has a mix of big-name retailers that cater to upper middle class consumers and locally-owned restaurants and shops that line a traditional downtown corridor to create a cozy atmosphere for a town with roots stretching back to the Gold Rush.

The city is filled with young tech workers for companies like Intel, Micron and PowerSchool. Many of those workers switched to working from home during the pandemic, keeping their jobs and paying taxes that contributed to the record state budget surpluses.

Folsom vice mayor Sara Aquino folds a napkin at Back Bistro Nov. 23, 2021. Aquino is an insurance broker. But she took a part-time job at one of her favorite local restaurants because they were struggling to hire people. (AP Photo/Adam Beam)

Sarah Aquino, the city’s vice mayor, had been focused on telling residents to spend money at local businesses. But now she’s telling them to take part time jobs at their favorite businesses, going on local TV comparing it to Uncle Sam recruitment posters during World War I and the “Rosie the Riveter” icon representing women who went to work during World War II.

For her part, Aquino — an insurance broker with a flexible schedule — has taken a part-time job as a hostess at Back Bistro, a restaurant offering casual new American/Californian cuisine at the Palladio shopping complex. She takes reservations, seats people, cleans tables and folds napkins all while earning minimum wage — which, in California, is $14 per hour and growing.

Aquino is careful not to call it “volunteer work,” since she is getting paid. But she now considers it her civic duty to cover four shifts a week to help one of her favorite restaurants stay open.

“Of course it’s not anything like, you know, asking people to fight in a war,” Aquino said, responding to some social media critics. “But (it’s) the idea of you’re doing it for somebody more than just yourself.”

Folsom gets about a third of its revenue from sales taxes, and Aquino said the city took a $3 million hit during the pandemic when many businesses were closed. Aquino feared the city could suffer more if businesses had to reduce their hours because of a lack of workers, a fear made plain when she couldn’t buy her husband a hamburger at a fast food restaurant that had to close at 2 p.m. because of a lack of employees.

California has added an average of about 100,000 new jobs each month since February, but despite that blistering pace the state is still tied with Nevada for the nation’s highest unemployment rate.

The state lost 2.7 million jobs in March and April 2020 after Gov. Gavin Newsom issued the nation’s first statewide stay-at-home order. Since then, California has added back about 1.8 million of those jobs, or just over 67%.

“We’re talking here about job recovery, not growth,” said Rob Lapsley, president of the California Business Roundtable, a group consisting of business executives from the state’s major employers.

In September, California had more than 400,000 job openings — a 50% increase from that same month in 2019 before the pandemic. That’s why the state’s major employers believe California’s labor market likely won’t reach pre-pandemic levels until the end of 2023.

That’s a long time to wait for people like Kerri Howell, a Folsom city council member who is an engineer by training but opened a restaurant last summer at the height of the pandemic. Howell said she didn’t think the pandemic would last this long or that it would be this difficult to hire employees. She says they have six workers, but they need at least four more.

“The chef and I are partners and we are here basically every hour that the restaurant is open, unless I have to go to a City Council meeting,” she said. “The workplace for just about everybody has changed dramatically.”

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