CINCINNATI — Small businesses hurt by soaring prices and staff shortages face more bad news. A local economist said mounting pressure on supply chains and incentives increasing competition for new employees could further change the way companies operate.
"We're seeing companies having to reorient how they serve customers," said Michael Jones, Ph.D., a University of Cincinnati economics professor. "Many restaurants are no longer open for lunch or they're just open for the drive-thru. That has been a characteristic of (the COVID-19 pandemic). I think that's going to continue."
Inside the Happy's Pizza in College Hill, everything is made-to-order except the stress threatening to fry co-owner Floyd Walker's investment.
"There's no profit," Walker said. "That's the problem we're having trying to give employees raises because there's no profit."
The restaurant's cost to buy chicken recently doubled, Walker said. Energy prices rose 32% too. Then there are repair bills. When one of the two $800 engines that power his pizza ovens broke, Walker paid more than $2,000 for a replacement part. Then, shipping delayed delivery. Walker lost two days worth of business waiting for it.
Meanwhile, he is losing workers. He and store managers now cook, serve and deliver food on top of their other duties.
"Workers are saying inflation is at 8%," Jones said. "I need to make sure I can afford the prices at the grocery store, clothes for my kids, energy prices at the gas pump. So, employers are needing to compete to get those workers back."
Verizon just raised employee minimum wages nationwide to $20 per hour. New hires in Cincinnati, Fairfield, Middletown and Liberty Township also get $2,500 signing bonuses if they stay with the company for nine months. The bonus for assistant managers is up to $3,500.
"Anything we can do to incentivize people to come and stay is a win for everyone involved," said Chris Serico, Verizon communications manager.
Their move mirrors an evolving market where the labor force has 1 million fewer workers than the county had before the COVID-19 pandemic. To bring them back, Jones sees employers offering more work-from-home options.
"That will cause some of those workers to come back," Jones said. "Although, I do think we've lost permanently several hundred thousand, even a million workers due to early retirement."
It is not good news for companies already closing early because they are short-staffed. At the same time, containers stuck in shipping ports and some Chinese imports stuck in Shanghai are adding pressure to supply chains.
None of that is helping Walker. Still, the former Proctor and Gamble worker turned entrepreneur will do anything to keep his business alive.
"You just keep working, keep doing it, hang in there and hope and pray that it turns around," said Walker.
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