Worker shortage unleashes a forever jobs crisis
Workers are in the driver's seat in the labor market, and that doesn't look likely to change anytime soon. It's also starting to alter the competitive landscape across the business world.
Driving the news: The terms of competition are shifting, especially in labor-intensive industries. Companies that have some distinct advantage in their ability to attract the best workers are likely to fare better.
Why it matters: It's not enough to have a great product. Companies need to find a way to attract the employees they need to fulfill demand — and in the super-tight labor market of 2022, that requires a new level of creativity and flexibility.
- In effect, for much of the last few decades, employers could hang out a "Help Wanted" sign, whether literal or virtual, and count on people lining up looking for a job. That has been turned on its head.
The big picture: In some companies' financial results in recent months, labor shortages have acted as a brake on earnings. Others in the same industry, not so much.
Consider FedEx and UPS. In the fiscal quarter ended in November, FedEx, which relies on armies of independent contractors, reported that labor shortages cost it $470 million.
- UPS, with a unionized workforce and higher pay, has reaped an advantage from loyal, long-term employees on its payroll.
- Its on-time delivery rates were higher than FedEx's in the run-up to Christmas (97.1% vs. 91.2%, according to ShipMatrix). Its stock price is up 31% over the last year, versus 1.5% for FedEx.
In retail, even amid widespread labor shortages, Walmart hired 150,000 employees this past holiday season. The company says its average hourly wage for store employees has risen $16.40, more than double the federal minimum wage, and that 400,000 employees have taken advantage of company-paid training programs in the last year alone.
What they're saying: For companies that develop their own pipelines of talent by being willing to invest in worker training and other creative strategies, "it's a big source of competitive advantage," says Byron Auguste, CEO of [email protected], a nonprofit focused on employment.
- "I think companies are realizing that now, and the question is how they get there, from where they are," he says.
Companies need to give workers a reason to want to work for them beyond a paycheck. Here's what Chris Floyd, a recruiter for the restaurant industry in the Washington, D.C., area, tells Axios:
- Bigger companies are definitely at an advantage because they have the budget capacity to absorb higher salaries and wages.
- But restaurants are competing for workers on grounds other than salary. Floyd recommends those smaller-revenue restaurant compete by offering workers better quality of life, such as by closing two days a week and guaranteeing employees a break from the grind.
- "If you treat people with respect and compassion and see them as whole people, they feel that and tend to be more loyal even if they could be making more elsewhere," Floyd says. "Some employees did stick with their employers throughout the pandemic because they believed the employers had their backs."
The bottom line: The demographic trends suggest this shift in power dynamics between workers and employers will not be a short-term phenomenon.