Enhanced jobless benefits are starving grocers of workers, NGA says

Dive Brief:

The National Grocers Association (NGA) is calling on the Biden administration to step up its efforts to push unemployed people to seek work in response to what it says is an acute labor shortage facing independent food retailers stemming from the government's pandemic response.
Nearly all of the respondents to a recent NGA survey blame their difficulty in finding workers on the enhanced jobless benefits included in the economic stimulus legislation that went into effect in March, NGA President and CEO Greg Ferrara said in a Wednesday letter to President Joe Biden.
The dearth of people seeking work in grocery stores is driving up wages and putting independent grocers at a competitive disadvantage compared with large supermarket chains, according to the NGA.

Dive Insight:

Grocery stores are contending with a labor shortage after serving as a beacon for people thrown out of work when the pandemic descended on the economy.

The government's efforts to help workers who lost their jobs maintain their unemployment benefits has for many people shifted from a lifeline to a reason not to return to the workforce, Ferrara said in his letter. The expanded benefits include extending unemployment assistance from 50 to 73 weeks and providing recipients with an extra $300 in weekly unemployment benefits through Sept. 6.

"While unemployed Americans certainly need a safety net as they try to get back on their feet, the benefits of combined unemployment and stimulus policies should not meet or exceed prior compensation, or businesses will be competing with the government for labor," Ferrara wrote.

A third-party consultant hired by NGA concluded that enhanced unemployment insurance combined with the stimulus checks and tax refunds that are part of the American Rescue Plan amount to the equivalent of approximately $34.22 per hour for the next five months if a worker continues to collect unemployment payments, according to the letter.

"It is simply impossible for grocers who exist on razor-thin profit margins to compete for work when the government is paying workers to stay home," Ferrara noted.

Ferrara added that rising labor costs are putting pressure on independent grocers as they look to compete with large grocery chains, which he said poses an especially serious risk for rural land low-income areas. These parts of the country "disproportionately depend on independent grocers for access to healthy and affordable food products and are increasingly seeing a retreat of grocery investment," Ferrara wrote.

The NGA believes Biden's announcement on Monday of a series of steps intended to get people back into the labor force are a "positive step," but Ferrara said he wants further action from the government. Although grocers increased pay, provided more overtime hours and distributed bonuses during the pandemic, "the industry is at a crisis point in its struggle to find qualified employees and keep grocery stores operational for hungry consumers," he said.

The measures the White House unveiled include accelerated child-care assistance, pressing states to expand their efforts to provide employment counseling to people receiving unemployment assistance, and offering credits to businesses to encourage them to rehire and retain workers.

Biden also said people who receive unemployment insurance must accept a "suitable job" if they are offered one. "There are a few COVID-19-related exceptions so that people aren’t forced to choose between their basic safety and a paycheck, but, otherwise, that’s the law," he said on Monday.

Other trade groups have also called on the government to dial up its efforts to press people to return to work. In a May 7 statement responding to word from the Department of Labor that hiring declined last month, the U.S. Chamber of Commerce said expanded jobless benefits make it financially advantageous for many people not to take jobs.

"Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working," Neil Bradley, executive vice president and chief policy officer of the business group, said in the statement.