These are unprecedented times for Damon’s Oceanfront Grill in Myrtle Beach.
Never before has the restaurant had a policy of hiring workers on the spot. And never before have they been closed on Mondays.
But with a severe worker shortage clashing with a projected record tourism season, the restaurant had to make changes.
“I could hire 50 people walking in the door right now,” said general manager Brian Pennington, who’s been with the ocean-front restaurant in Myrtle Beach for the 27 years it’s been open. “We’re living in a different time and a different country right now. Why work when you can get all of the above? Give ‘em more stimulus, give ‘em this, let ‘em ride unemployment more, put more incentive on there not to come to work.”
There are other reasons for the worker shortage in the hospitality industry, including competing industries and fewer J1 Visa workers, but the extra $300 a week in federal unemployment benefits is a common target, and without a doubt contributing to the labor deficit that’s causing longer wait times at restaurants and “help wanted” signs all over the Grand Strand.
Aside from the Monday closing, Damon’s has stopped taking reservations for events like weddings and family reunions, which Pennington said could bring in between $5,000 and $10,000 a pop.
A semi-private dining room which holds 60 people is closed.
“I’m not even opening it up,” Pennington said. “People still say, ‘Well, you have all those tables back there.’ ‘Yea, I do, you’re right. But I don’t have anybody to work that section.’ I’m on a two or three hour wait, and you’re talking 40, 50 names; those extra 13 or 14 tables in that backroom, they would be a big plus for me if I had people to fill that void.”
But he doesn’t. And competition for folks who do want to work is cutthroat. A Coastal Carolina University student recently showed up to apply for a job, Pennington said, and he hired her on the spot.
“If I don’t grab you when you come in the door today, if you walked out that door, you’re gonna go next door and they’re going to hire you,” he added. “We’ve never done any on-the-spot interviews. I’ve instructed all my staff, hostess, bussers, everybody, servers, bartenders, [if] somebody comes in for an application, come and get me. Never have we ever done that in history.”
In early 2020, things were looking up.
“Each year was another growth year for summer destinations,” said CCU professor and economist Rob Salvino. “So we track retail sales, obviously hotel occupancy and average daily rates, and hospitality fees, a number of indicators that give us an idea of how the economic performance is for the economy, and it’s certainly an upward sloping line. We were really approaching record numbers in everything, from airplane deplanements, just everything associated with travel, and then the pandemic hit.”
And 2019 was also a record tourist year for the Myrtle Beach area, when 20.6 million people came to the beach, according to a Myrtle Beach Area Chamber of Commerce estimate, which doesn’t yet have any numbers for last year.
Between 2014 and 2019, average occupancy at Myrtle Beach area hotels, condo-hotels and campgrounds crept up from 55.4% average occupancy to 57%, according to the Brittain Center for Resort Tourism, based at CCU. Occupancy in vacation rental properties dropped during that same time, from 64.1% to 56.5%.
But in 2020, vacation rentals made a comeback, kind of. While average occupancy for hotels and condos dropped to 42.9% average occupancy, vacation rentals remained steady, creeping up from 56.5% occupancy in 2019 to 56.9% in 2020, although average room prices dropped by about 15%.
Taylor Damonte, the Brittain Center’s director, pointed to two possible reasons for the vacation rentals’ relative success. First, he said, was the absence of any large storms in the area last year, which can send folks fleeing inland during evacuation orders. Another explanation could be a safety-conscious traveling public.
“There’s been a lot of speculation, and at this point it’s only anecdotal speculation, that demand for vacation homes was actually stronger during 2020, due to the traveling public’s desire to stay out of densely populated hotels and condo hotels in favor of booking in separate vacation homes,” Damonte said. “In any case, for whatever combination existed, vacation rentals during the fall of 2020 were quite successful, at least in the Myrtle Beach market, compared to what they were in the years 2015, '16, '17, '18 and '19.”
That anecdotal explanation seems to be backed up polling from travel marketing research firm Longwoods International, which the North Myrtle Beach Chamber of Commerce used last summer as part of an effort to attract tourists during the pandemic.
The research showed that folks were more likely to vacation at destinations that had COVID-19 precautions in place and destinations where they could safely socially distance and avoid crowds.
The firm also said vacationers were more likely to go to destinations they could reach by car. The Grand Strand brings 95% of its visitors by car, since it’s just a day’s drive from most of the East Coast.
“Because the Myrtle Beach area is accessible by the most densely populated areas in the country by automobile… most of our visitors don’t come by air,” said Damonte. “And so events that impact air travel such as 9/11, such as the COVID-19 health pandemic, don’t necessarily impact the Myrtle Beach market to the same degree that they would long-haul destinations which rely primarily on air travel.
KeyData, a vacation rental marketing data company that the Myrtle Beach chamber uses for occupancy projections, shows that average occupancy for the first two weeks of June is predicted to be above 60%. Those projections are based off of AirBnb and VRBO listing, as well as participating rental companies, and is weighted heavily in favor of vacation rental properties.
“So when KeyData says we’re going to be 60 to 61% full on average for those two weeks, That could still mean virtually 100% occupancy on at least two nights a week,” Damonte said. “For 2019, we were, during that same period, below 50% occupancy during those weeks. Based on the metrics that KeyData is reporting, we would expect that the summer of 2021 will be stronger than the summer of 2019. And 2019 was the strongest year on record for occupancy in the Myrtle Beach area.”
Rick Elliott, whose North Myrtle Beach-based realty company manages hundreds and hundreds of vacation rentals, is optimistic about this year.
“I think this summer will be better than 2019 when it’s all said and done,” Elliott predicted. “We’re seeing strong demand for family vacations this year, and people getting their vaccines and feeling more comfortable to come out and eat and do business in tourism communities like North Myrtle Beach, so I’m extremely excited. From what I’ve heard a lot of people say, phones are ringing and they’ve been very busy with people looking to take a vacation.”
Salvino said summer leisure destinations across the country and particularly in the South and remote Northwest are preparing for a strong season. The stimulus checks aren’t the main driver of travel, he said, pointing to record demand for private jet travel as an indicator that the wanderlust cuts across income levels.
“So there’s extreme pent-up demand nationwide for families to get out and just kind of enjoy some time away from what’s been a really difficult year emotionally, psychologically, financially, everything, with the pandemic,” he said.
But since the 2020 economy was already shaping up nicely, Salvino added, “it’s more a question of ‘Are we just returning to where we were and hitting the growth that was there before the pandemic hit?’ with the big exception of the number of jobs that will be back. We’re not going to be there in terms of the labor force. That’s a tough one to bring back.”
There are a number of factors causing the dearth of labor this summer.
Students and employers could have difficulty navigating international restrictions on travel, which would reduce the number of J1 students in town, and it’s unclear how many college students will stick around Coastal’s campus this summer, said Salvino.
But there’s also the extra unemployment benefits, which are currently slated to run until September, and competition among other industries for employees who might otherwise be working in restaurant kitchens.
For example, according to a South Carolina Department of Employment and Workforce report of seasonally adjusted non-farm jobs, the construction industry gained 1,800 jobs in March 2021, transportation and utilities gained 1,600 and manufacturing gained 1,000. Leisure and hospitality jobs remained relatively flat last month, after losing 38,000 jobs between February 2020 and February 2021.
Salvino points to warehouse jobs, driven by the explosion of e-commerce during the pandemic, and the construction industry as areas that have better working conditions and that pay more.
“They’re paying relatively better in a lot of cases for the warehouse-type jobs,” Salvino said. “And another one’s construction. Construction jobs pay very well, certainly, relatively, and they, themselves, construction firms, are also trying to attract workers. So the restaurants and other hospitality employers are having to compete with a construction sector that is just booming.”
An SCDEW March 2021 community profile report for Horry County backs up that explanation. According to the report, the average annual wage for folks in the accommodations and food service industry was just over $22,000. But the construction industry pays an average wage of more than $48,000. Transportation and warehousing comes in at just under $43,000.
The extra $300 in benefits makes unemployment and easy choice for folks making under $30,000.
“In South Carolina, there have been estimates that show about 30% of our covered workforce are impacted by those extended benefits, and an inflection point at which point you may be better off on unemployment is just a little over $30,000 a year, which is close to $14 an hour,” said Salvino. “So that certainly hits those back-of-the-house workers.”
Horry County’s seasonally adjusted unemployment rate in March was 6.3%, while the unemployment rate for the state as a whole was 5.1%. According to the SCDEW, almost 43% of the 3,218 unemployment claimants in Horry County last month had worked in the accommodations and food services industry.
On the flip side, there are at least 1,043 job openings in Horry County's accommodations and food service sector. That number is almost definitely an underestimate, since they only include job openings voluntarily submitted to SCDEW's SC Works website.
The result of attractive unemployment benefits, fewer folks in town and competition from other industries has made it hard for Horry County’s hospitality industry employers to attract new workers.
“I think the impact there is going to be an impact of raising wages, and that’s already happening nationally,” Salvino said. “Particularly the larger firms like Taco Bell, McDonald’s, some of the franchise fast food restaurants, the larger restaurants will be doing this as well, data is already showing they’re offering significant sign-on bonuses. The bottom line is increasing compensation.”
Elliott, who recruits house cleaners from North Carolina and other South Carolina counties to maintain the hundreds of vacation rentals the company manages, said it’s important for the state to provide unemployment for those who need it while encouraging those who can work to get back on their feet.
To find workers this summer, he said, his company will have to increase the amount of money he pays workers per unit cleaned, recruit employees even beyond the counties where he usually finds workers, like Dillon and Marlboro, and offer gas cards to employees as an extra incentive.
“I think the public expects more in a post-COVID environment, so in my opinion, we’ll have to pay people more to clean the properties. That’s not a negative, I think that’s positive for the community and it’s definitely positive for the folks that are coming that are working here,” Elliott said, adding that the cost of cleaning supplies and gas are also going up. “We are having to increase our fees to offset those costs to be able to provide the services that the public and the homeowners that we work for expect.”
Damon’s Oceanfront Grill is also raising wages, said Bennington, the restaurant’s general manager. Hosts and hostesses make around $8 or $9 an hour, he said, but those wages are no longer competitive.
“If I made $9 an hour and I’m working 40 hours a week, why wouldn’t I want to go to Target and make $15 an hour?” he asked. “They may only give me 20 hours a week, but I’m still making as much money and working half the hours. So therefore, as a business, we’ve got to be competitive. We’ve got to take care of the people that are taking care of us. We’re in the raise process right now, and we’ve assured all of our staff, ‘Look, we get it, we understand it, we know what business is, we’re going to take care of our people.’”
Angelos’ Steak and Pasta in Myrtle Beach is in a similar predicament.
Owner Angelo Antonucci, who’s run the business for 41 years, said he’s already given raises to back-of-house staff, although he said waitresses and waiters can make $200 a night once they’re experienced. He’s also offering cash bonuses to servers who stay for three months.
While he’s hired five new wait staff in the past couple of weeks, he’s still short by about 10 servers, several bussers and several kitchen staffers, he said.
“Most people are smart and say, ‘Okay, if I stay home, I’m guaranteed this much money not working, and if I go to work, I have to lose my home time, my private time doing what I want, and have to go to work and work, and I probably will make less money,’” he said. “‘Why would I go to work?’”