‘Desperately short-handed’ Minnesota businesses curtail offerings, cut hours to get by

Two people pose in front of building
Melissa (left) and Billy Hagberg in front of their family’s Hagberg’s Country Market in Lake Elmo, Minn., on Nov. 7.
Mark Zdechlik | MPR News

Updated 9:30 a.m.

At Hagberg’s Country Market, the hunt for workers to run the meat counter, stock shelves or staff checkouts is a constant struggle.

“Desperately short-handed all of the time,” laments Billy Hagberg. Higher wages and more-flexible work arrangements haven’t done the trick either.

The labor challenges prompted Billy and Melissa Hagberg, the store’s third-generation operators, to go in a different direction: They’re open for shorter hours and no longer serve customers seven days a week, remaining closed on Mondays.

“I had been on for seven days a week and then I realized how just completely exhausted we were,” Hagberg said. “We looked at each other and said we can't keep up."

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Melissa Hagberg said the shift reflects their willingness to “continually adapt and be open to try new things.”

She adds, “Some of them will work and some of them won't work.”

For smaller proprietors like the Hagbergs, COVID-19 disruptions forced a close examination of their staffing needs, as did the tight labor market since that has shown few signs of easing.

Scores of Minnesota businesses that managed to make it through the pandemic did so by changing up the way they do things. Some pivots remain in place because of ongoing worker shortages. It’s apparent in retail, hospitality and other service sectors where hybrid work isn’t as feasible. 

Department of Employment and Economic Development officials are set to provide an update Thursday on Minnesota’s job picture. Barring a surprise, it’s expected to show there isn’t much slack in the pool of available workers.

Years of low unemployment

Minnesota’s unemployment rate has been around 3 percent or lower for 24 consecutive months, which is among the longest stretches on record. The Department of Employment and Economic Development released figures Thursday for October, during which the seasonally adjusted rate moved up a tick to 3.2 percent.

Oriane Casale, assistant director of the Labor Market Information Office for the DEED, said recent data shows two openings for every unemployed worker. That’s the sign of a challenging environment for employers, she said.

And coming out of the pandemic, many service-oriented businesses didn’t just go back to the old ways. Many couldn’t, given that workers had moved on and customers grew used to a different level of offerings.

“Those were the jobs that were hit the hardest in the pandemic and things are still trying to come back into equilibrium,” Casale said. 

She adds, “These are sectors that people tend to move out of when they can into higher-paying jobs, more stable employment. These industries tend to hire younger people; they tend to hire people who are more likely to move on to a different industry or a different occupation.”

The shakeup of the past few years did help boost wages in service-oriented professions. Although the rate of wage growth has slowed recently, the average wage for food and drinking establishments rose from $15 per hour in May 2021 to $17.86 this fall; for retail it went from $18.50 per hour to $19.43 this fall, according to DEED statistics. Starting wages are often lower in those sectors.

The pandemic forced many entities to rethink their relationship with their customers and workers.

‘Reset moment’

“The pandemic was a reset moment. There's no doubt about that,” said Bruce Nustad, president of the Minnesota Retailers Association.

“I think this grand reset has some advantages and some disadvantages,” he said. “In some cases it has worked out great for customers and in other cases customers are feeling like some of those shorter hours are a little tougher from a convenience perspective.”

Man smiles in office
Bruce Nustad, president of the Minnesota Retailers Association.
Mark Zdechlik | MPR News

Thomas McAleer owns Cascade Lodge and Restaurant in Lutsen along the state’s North Shore.

McAleer opens later and closes earlier. A pandemic grant paid for a large tent that’s added capacity and has proven to be an attractive summer option for guests. He and his wife also invested in employee housing to attract and retain workers.

“We had no ability but to figure it out and make it happen and make the best of it,” he said. “It has proven to be a very successful change for us.”

Back in Lake Elmo, Tina Elam said she’s much more understanding of small businesses reducing hours and even closing on some days. But Elam, 45, is not happy with big corporations that have pulled back — including her pricey gym that’s no longer giving her what it had been. It cut hours and reduced child care offerings. 

Are they just trying to make more money, she wonders.

“You know, situations that I've come across now where I've thought, this is a larger corporation and are they in fact making decisions that are helping their own bottom line but maybe not providing the same level of service that they used to provide previously?”

Nustad, from the Retailers Association, said many businesses are struggling to fine-tune payroll costs with customer service.

Two people stand next to lodge sign
Jelena (left) and Tom McAleer own Cascade Lodge and Restaurant in Lutsen, Minn.
Jelena and Tom McAleer

“We're seeing just a little bit of a balancing of the marketplace relative to consumer expectation and you know what retailers can do to continue to be profitable and still get the job done,” he said.

At the Lake Elmo grocery store, Billy Hagberg said even with shorter hours business is good.  But he knows that he and his wife are sacrificing sales now that they’re closed a day per week. He can feel it when they’re there some Mondays to catch up on work behind the “closed” sign and locked doors. 

“We just see cars constantly rolling in and rolling in and people coming up to the door. And we’re probably leaving something on the table,” Hagberg said. But, he added, “It probably sounds preachy in a way because it took me so long to see it, but how much is worth it? Where do you draw the line as to the business and your personal life.”