MNI INTERVIEW: Rising Virus Cases Keep US Service Workers Away

Increasing Covid-19 case counts are driving workers away from the U.S. services sector, and even with signs a vaccine is coming it may take years to restore the confidence of customers kept out by health restrictions, Institute for Supply Management chair Anthony Nieves told MNI Thursday.

Managers are seeking to "over-hire" staff including those who don't have all the needed skills, because they anticipate high turnover and absenteeism as the outbreak worsens, he said in an interview.

Many laid off workers who have not exhausted state unemployment insurance are also choosing to sit out at this time, prioritizing health over finances, he said.

"There is a fear of exposure," he said, particularly among workers in positions with a high degree of social contact like restaurant waitstaff. "It makes it tough for not not only finding workers but also for growing employment levels. The pool has shrunk and opportunities are not what they were."

Unlike employers in the manufacturing sector, service-sector businesses didn't offer bonuses or raise hourly wages to attract workers through November, Nieves said. Service businesses in November were optimistic about prospects for a Covid-19 vaccine, and are hopeful that the pool of workers will increase in turn, Nieves said.

GOING TO TAKE YEARS

The ISM Services PMI fell 0.7 points to 55.9 in November, the lowest reading since May though the figure exceeding 50 still signals expansion. The employment index climbed to 51.5 from 50.1.

Headline growth indicates the service economy is "on the right track," but nowhere near where it was pre-Covid, Nieves said.

"We can't be complacent in the sense that everything is great -- it's not," he said.

Money from the CARES Act's Paycheck Protection Program is long gone, and small businesses especially are "hanging on by a thread," he said.

Even with additional aid from the government, it will take some time for business restrictions to be lifted and for consumer trust to be regained.

"That recovery is not going to be months, it's going to be years," he said.

The survey showed 14 industries growing and four contracting ones, most of those often requiring close contact: arts and entertainment; real estate; education; and other services. The report also showed short supplies of personal protective gear such as gloves and gowns.