Sven and Ole’s Pizza in downtown Grand Marais typically has 40 employees. This summer, it has four.
A couple of weeks ago, the pizzeria, which has been serving customers since the early ’80s, posted on its Facebook page alerting customers of its staffing shortage, sharing updated abbreviated hours, and asking for patience. Just a day before, the owner of neighboring coffee shop Java Moose posted an Instagram video imploring visitors to be patient while waiting for service at local restaurants. Both cited serious understaffing at hospitality businesses around their town of Grand Marais, a top tourist destination on the North Shore of Lake Superior.
According to data from the U.S. Census Bureau, Cook County — home to Grand Marais and the smaller, unincorporated communities of Lutsen, Tofte, Schroeder, and the Grand Portage Indian Reservation — has a year-round population of just 5,376 residents. But each year, the county sees an estimated 1 million visitors — most between the months of May and October, said Kjersti Vick, marketing and public relations director at tourism organization Visit Cook County.
Labor shortages are nothing new for rural parts of the state; according to state data, job vacancy rates in Greater Minnesota have been growing since at least 2008. Jim Boyd, executive director of the Cook County Chamber of Commerce, said that Cook County has been “touch and go” on having enough labor for years. Since 2015, the county has routinely seen unemployment rates drop below 3 percent during summer months. Boyd cited growing housing shortages and the pandemic as the major causes.
“I know a lot of very wealthy resort owners who, at certain times of the year now, are cleaning rooms and making beds because they don’t have enough employees,” Boyd said. “That all said, though, this summer’s shortage is certainly more extreme thanks to COVID.”
International workers essential to local economy
For decades, employers in Cook County have been dependent on international workers to fill labor gaps during tourist season. The workers typically come to the U.S. via one of two visa programs: the J-1 Visa Summer Work Travel Program or the H-2B program. The J-1 program allows full-time international college and university students to live and work in the United States for up to four months. Many return for several consecutive summers while in school. The H-2B visa holders are foreign nationals who come to the U.S. to fill temporary, non-agricultural positions. They can stay in the country for up to three years.
Typically, Boyd said, J-1 and H-2B employees in Cook County work two jobs at a time: one for the companies who sponsor and house them, often large resorts and hotels, and another for smaller employers in town, like restaurants and gift shops.
That sufficed for decades, but in recent years, it’s been tougher to bring in visa holders for a number of reasons, including the pandemic and lack of affordable housing.
COVID-related travel bans around the world stifled J-1 and H-2B workers’ ability to come to the U.S. in 2020 and 2021. The Department of State even temporarily suspended all routine visa services at all U.S. embassies and consulates for a period of 2020. When they did finally reopen, Boyd said, they were so backed up with requests that many applications were denied or never processed.
Jelena McAleer, who co-owns Cascade Lodge just 15 minutes outside downtown Grand Marais with her husband, said Cascade typically employs around 10 J-1 students each summer — about a third of its total staff. However, since the start of the pandemic, the lodge hasn’t been able to hire any. “This summer, we tried to bring in a couple of returning J-1 students who previously worked with us, but they were denied,” she said. (McAleer herself came to the U.S. from Croatia nearly 20 years ago on a J-1 visa.) “The program, although active, is not currently being productive because almost everyone is being denied. We cannot count on the J-1 workers the way we used to, and we’ve had to shift our attention to recruiting locally and nationally here in the States.”
Until Cook County can get those workers back, local business owners are scrambling to stay afloat by recruiting anyone they can, working long shifts, and condensing business hours and offerings.
Long-time Grand Marais business owner Beth Kennedy and her son own two businesses in town: Birchbark Books & Gifts and Beth’s Fudge & Gifts. Beth’s Fudge & Gifts usually has 15 employees. This June, it had five.
“We would normally have four to eight international student employees,” Kennedy said, “But this year, we have none.”
To compensate, Kennedy said they’ve been forced to close four hours earlier each day than they normally would. “We don’t have a second shift staff,” she said. “I want people to understand how important those J-1 students are to our economy here.”
Barb LaVigne, three-decade owner of Angry Trout Cafe in Grand Marais, has enough workers at the moment, but she’s not confident it’ll last the summer.
Usually, about 30 percent of Angry Trout’s staff — about 12 employees — is made up of J-1 students. This summer, the restaurant has only been able to find four and has had to fill the gap with local college students. “We love college kids and certainly want to hire as many local kids as possible, but they usually leave in mid-August, when we’re the busiest,” LaVigne said. “So this year, we’re anticipating having a crunch in August.”
Housing shortage exacerbates labor shortage
Pandemic or not, a major shortage of affordable housing in Cook County is making the shortage of labor impossible to solve, Boyd said.
“I get applications all the time for people from Duluth, Minneapolis, the Iron Range, Wisconsin — but I have nowhere for them to live,” said Sid Backlund, owner of Sven and Ole’s Pizza. “We used to rent a house or two each summer or line up some cabins or whatever was available and put out-of-town, college, or international employees in them. But over the last 10 years or so, a lot of those places have been bought up by people coming in from other places … and a lot of them have been turned into vacation homes and Vrbo and Airbnb rentals, so they’re gone now.”
LaVigne agreed. “I know there are people who would love to come to work in Grand Marais, but there’s just no place for them to live.”
When McAleer and her husband acquired Cascade Lodge in 2017, she said they quickly learned that having affordable employee housing was the only way to get by.
“One of the reasons why we are in a little bit better position right now than many others in the area is that, over the past three years, we have heavily invested in new employee housing and in improving existing employee housing,” she said. “It’s a significant investment, but it’s the cost of doing business up here.” Cascade Lodge houses 100 percent of its employees on its grounds. McAleer believes that having that housing is the only reason they’ve been able to recruit locally and nationally since the pandemic, and likewise, is the biggest reason their business has survived.
Small business owners in Grand Marais who don’t own employee housing, like Backlund and LaVigne, can only obtain international workers by hiring the ones sponsored and housed by local resorts and hotels. But of course, with this year’s shortage of international workers, that’s not an option.
Building affordable housing outside of the city limits of Grand Marais isn’t an affordable option either. Grand Marais is the only incorporated town in Cook County with municipal sewer and water. “If you want to build a home outside Grand Marais … you pay for the road, the sewer, the well, the power,” Boyd said. “You have at least $100,000 in the ground before you even put up the first stud.”
“We’re really focusing on ways to create more affordable housing here,” Boyd said. “I think there has to be more discussion here about the need for higher housing densities and changes in zoning.”
Tourists still welcome
Even though business owners and employees in Cook County are exhausted from working long hours, they’re still thankful for the opportunity to serve tourists.
“We really want tourists to continue to come,” Boyd said. “We depend on having them here. We just need a little patience and understanding right now when they visit. We’re doing our darndest to treat them well and to make sure that they’re comfortable and that they have clean places to stay, good food to eat, and places to explore.”
McAleer echoed Boyd’s sentiment. “We just love that the North Shore tourism business is so strong right now. We’re hoping it continues to hold on for years to come and that we are able to keep bringing good employees here. We all need it.”
Bluefin Bay Family of Resorts and Lutsen Resort were contacted for this story. Lutsen Resort did not return calls or emails. A spokesperson for Bluefin Bay said the resort was unable to participate due to being overwhelmingly busy.
I was amazed to read an entire article about a perceived labor shortage and not see a single word written about wages. What are these places paying their employees? I see a lot of solutions being discussed, but none of them seem to involve paying the employees more.
I am also not really feeing sorry for the places that cannot import cheap foreign labor because of Covid, especially since these parts of the state keep electing anti-immigration Republicans. Get Americans to do those jobs!
Hey guys, this is free market at work. This (cc to my friend Paul) supply and demand at work. When there is more demand for labor than supply, the cost of labor goes up. There isn’t a labor shortage here There is a wages shortage. And if you can’t afford to pay your employees what the market demands, you aren’t running a successful business.
When I was up in Grand Marais at the end of May, there was a bunch of “Hiring, starting at $20/hr” signs posted on several of the businesses downtown.
Great! Sounds like someone has figured it out.
Again, I wish this author would have asked these places about the wages they are paying.
You can raise wages overnight but you can’t build housing overnight. Duluth has housing but it’s a 2 hour commute to Grand Marais.
This is true. But if the wages were higher, people would be willing to accept longer commutes.
A 4 hour (there and back commute) seems a bit extreme in terms of time and economics even at $20.
Sure. And maybe $20 isn’t enough. But I expect that people earning more than minimum wage will be willing to pay more to live and you’ll see housing open up in places closer than Duluth.
Its a vicious cycle – pay low wages, and there is little incentive to add housing. Or add anything.
Well not necessarily. I expect the housing shortage is as much about the actual physical housing as it is about affordability. If investors are literally buying up every available structure and turning them into vacation rentals, no amount of wage would make a difference in housing availability. A similar scenario plays out in small river towns near where I grew up, entire neighborhoods have been bought up as “vacation property” by out of state buyers, for the sole purpose of renting out on the internet. Could more housing be built, sure, maybe, but who exactly is going to pony up dollars to build housing for temporary help?
The seasonal nature of the work is a tough problem to solve. There isn’t going to be any work in the winter, so no one is going to want to live there then. And while big cities are in some cases regulating the AirBNBs, I doubt these small towns will or even could regulate them.
I don’t have a fix there. All I can say is pay people more.
When I was a younger man I had a friend that lived on Cape Cod. She would work insane hours during the summer and live on unemployment in the winter.
Uh, Pat? Are you really surprised MinnPost missed that angle in an article like this?
But really, it’s a question that is missed by nearly all media. It’s a bit like the sun rising in the East.
No, I’m not surprised. And for all I know, these places have raised wages (although I doubt it).
This is just really, really poor journalism by Minnpost.
Thank you Pat. I’ve pointed this out before, omitting basic financial information that would inform the scenario seems to be standard “business reporting” procedure. We had an article about Nice Ride a while back that did the same thing. It’s almost like some business reporters are actually trained to take the most obvious questions off the table when they sit down to write a story.
They could conceive of allowing back yard rentals, or allowing shops to add units above.
But they would need to accept the form of their town would … change!
Early in July, I spent several days and nights in Grand Marais and the surrounding state parks, and the article is spot-on about the shortage of workers. I was staying at a motel outside of town with very clear rules about “no cooking in the room,” so restaurants were my only option, and some of the ones I patronized had significantly shorter hours than usual – in one case, only 6 hours a day, to capture the breakfast and lunch crowd, but avoiding the dinner hour – or they were, to phrase it politely, very short on staff. My motel was a Mom and Pop operation, with owners who did all the housekeeping and maintenance themselves, so employees weren’t much of a problem for them directly, but for an operation of any size, staffing would be a big issue.
I will point out that it’s not just “affordable” housing that’s nearly impossible to find around Grand Marais, it’s housing of ANY kind if you’re not a millionaire, possibly a multimillionaire. One of the owners of the motel I stayed at said that a developer she knew was contemplating building a development of “starter” homes outside of town, but that the “starter” homes in question would start at about $350,000 and go up from there. We both wondered what sort of work in Grand Marais (aside from one of Tom Emmer’s infamous restaurant servers of a few years ago) would pay someone more than $100,000 annually, which they would need in order to qualify for the necessary mortgage.
Meanwhile, Pat Terry’s point about wages is spot-on. The line for Sven and Ole’s pizza went around the block on a Thursday night, and large signs were posted in the windows, pleading for workers. There may have been text on those signs referring to higher wages, but I confess that, from across the street, nothing was visible to indicate that someone could make very good money by working there. It’s worth pointing out that raising wages would cut into the profits of the business owner, who might then be compelled to raise prices, which might result in lower sales figures. Either way, eventually, they’d be looking at a lower income.
My wife and I have been banging around the North Shore for decades, and we’ve noticed the heavy presence of mostly Eastern European young people staffing the businesses. It’s really cool in a lot of ways but we’ve been commenting for decades as well that this is an obvious vulnerability built into the business model. One could imagine a variety of ways that this pipeline of labor could be pinched or shut off. We’ve also wondered why it is that young people from Europe are willing to travel half way around the world for a summer job… where are the young people in MN or the US?
There must be a cottage industry that connects employers with these workers, maybe that could be another story. I’m sure these kids didn’t just show up in Duluth expecting to get a job somewhere.
Yeah, the first time I was up there I could not figure out why everyone had Russian/Eastern European accents.
I expect most of the young people in those communities have left for more lucrative pursuits elsewhere. The vast majority the youth of those of us raised in such places is spent devising a method to get out of them. I expect Grand Marais is no different in that regard than the rural burg that I come from. Certainly no temporary tourist service job, no matter if the wages were increased, would ever have prevented me leaving for the city, and the much higher wages, and greater opportunity for success, it offered.
Well, yes and no. You have to remember there aren’t THAT many teenagers living along the North Shore to begin with, so even if they all stayed it wouldn’t be enough. Sure, young people move away, but that’s about pursuing careers that aren’t available on the NS, not everyone wants to be a resort manager or restaurant owner or worker. And nobody lives off of summer jobs indefinitely.
I think the problem here really does trace back to investors or others snatching up available land or housing. Workers need a place to live no matter how much you pay them. I suspect what was happening up there was that these employers were bringing in foreign teenagers, putting them up in spare rooms, and paying them enough to make it worth their while relative to the income they would make back home in the same period of time. If living expenses are low enough, and you can stash enough money to bring home, it might be a good deal. What I’m curious about is the travel expenses? How much did it cost to bring these kids over, and who paid for that? This is why I suspect there is a cottage industry of some kind that connects these foreign workers with these NS employers.
At any rate, if that foreign pipeline dries up or gets pinched, you need to fill the gap with American teenagers or collage students. THEY need to make more money because it’s not worth it to come over and live in cheap housing for a few months unless you go home with a big wad of cash. You can find a low paying job anywhere, you don’t have to go to the NS and share a room with three other people.
Meanwhile these places on the North Shore, and in Northern MN in general charge a boatload of money. I’ve stayed in boutique hotels in Paris, Boston, San Francisco, and London, for less than a night at Bluefin Bay or Lutsen, and the restaurants aren’t cheap either. These guys get premium rates, so when they complain about narrow margins or whatever, you have to take that with a grain of salt. And they are full-up most of the time.
So yeah, what’s missing here is how much are these guys offering to pay, and where would their workers live? Are they providing free housing, or are they paying $16 an hour and taking $5 of it back for housing? Again… it’s like business reporters are trained to omit or ignore basic questions like this. I mean, maybe a business owner won’t answer those questions… but you still ask, and if they refuse to answer you report that right?
Yeah them building their own housing in IS an option, but I expect that will probably take time, given the current state of building supply market, and their relative remoteness. I really think a lot of this is the supply constraints of having so much property taken up by rental outfits. Were this a different area politically, I’d expect to see some more restrictive covenants regarding rental use of existing real estate, but given the conservative bent, who knows?
It is an industry. Many of the young people want to come here, work insane hours for a few months and then take an American vacation. A few years ago there was an episode of This American Life about this program.
For the past 10 years, the city and county government has done nothing while much of the housing stock here was
For the past 10 years or so, the city and county government sat by and did nothing while much of the housing stock here was bought up by investors and turned into short-term rentals. Now it’s reached the point where there are few if any options available for workers and instead of addressing the elephant in the room; we are told that workers are lazy or a myriad of other factors that obfuscate the reality.
This was a problem that many of us here saw coming years ago. A problem that could have been avoided or at least mitigated somewhat with some sensible regulations in place. What we have now is a community where a small number of wealthy business owners and investors cash in while the rest of us are left dealing with the fallout of having hoards of tourists overflowing in a community that simply doesn’t have the capacity to absorb them while still maintaining some sense of community.
My wife and I visited Grand Marais last week. It was disappointing to see restaurants closed or have limited hours. This experience gives us pause for visiting other Minnesota, Iowa and Wisconsin tourist communities who are suffering the same as Grand Marais. Our experience in Duluth was very good. The Duluth Grill, OMC Smokehouse and Bent Paddle Brewery was staffed with exceptional servers. Had we know about the limited hospitality in Grand Marais we would have stayed in Duluth and visited the North Shore another time.
It amazes me how the business owners where I live along the North Shore can have customers lined up outside their establishments a block long and complain that their $12/hr wages are an impediment to profitability. For too long these business owners have been raking it in and now they finally have to pay higher wages and they don’t like it. They would rather see service suffer than having to pay liveable wages.