Facing the tightest labor market in 50 years, many delivery and warehouse companies fell short of their hiring goals this holiday season, staffing firms say, at least raising the prospect of some shipping delays.
“Understaffing is absolutely a problem going into the holidays,” says Mathieu Stevenson, CEO of Snagajob, an online job site. One package delivery company he would not name still needs about 10,000 drivers, he says.
Meanwhile, most major retailers are well-staffed, and some may even have too many employees because they brought on lots of workers early to get ahead of a feverish scramble for seasonal labor, says Bart Sichel, an independent retail consultant. Many smaller shops that can’t offer the same pay and benefits may find themselves short-staffed, he says.
To cope with such imbalances and persistent worker shortages, a growing number of companies are providing flexible scheduling software and sharing workers through networks so they can compete more effectively with gig economy giants such as Uber and Lyft.
In October, retailers added 137,000 workers on a non-seasonally adjusted basis, up 18% from the 116,000 jobs added last year, according to the Labor Department and outplacement firm Challenger, Gray and Christmas. Meanwhile, payrolls in transportation and warehousing fell 17% to 43,700.
That’s not because warehouses and freight companies didn’t need shelf-stockers and drivers, says Andrew Challenger, vice president of the Challenger firm. IHS Markit predicts holiday sales will rise a solid 4.6% this year, though that’s after a poor performance in 2018. Rather, he says, with unemployment at 3.6%, near the lowest mark since 1969, businesses simply can’t find enough workers, especially during the busiest shopping season of the year.
In September, there were 7 million job openings, compared to just 5.5 million unemployed workers. And just 35% of 16- to 19-year-olds – a prime labor supply for retailers – were working or looking for jobs in September, down from about 52% in 1999.
“Companies are just not able to hire at the level they would like,” Challenger says.
The November jobs report, out Friday, is expected to show whether employers added enough temporary workers during the biggest holiday hiring month.
To get a leg up, large companies on average raised seasonal workers’ pay about 30% from the same period a year ago, similar to the bump in holiday wages last year but well above the single-digit wage hikes of previous years, Stevenson says. They also rolled out an array of incentives. UPS let students earn $1,300 toward college expenses. Kohl’s offered paid breaks,15% store discounts and a free onsite health center at distribution and fulfillment centers.Chipotle is doling out quarterly bonuses.
Yet employers are increasingly adopting non-financial strategies to attract and keep workers:
Most large retailers brought on seasonal workers in August and September to get an early jump, says Jim McCoy, general manager of Scout Exchange, a job recruiting site. Ads for seasonal jobs in August have shot up 68% over the past four years, according to staffing giant Manpower. Yet that means the chains were saddled with much higher labor costs for months before the holiday season began, Sichel says.
Making temps permanent workers
Employers are converting more seasonal workers to staffers, both as an incentive to attract them at a crucial time and to bulk up for long-term labor needs, says Amy Glaser, senior vice president of Adecco staffing. About 15% to 20% of holiday workers are being hired permanently, up from an average 5% to 7% over the past five years, she says.
Need a lift?
Shuttle services are picking up warehouse workers and ferrying them to warehouses located in remote suburban or rural areas, Stevenson says.
Scheduling software, sharing workers
Companies are also making more dramatic changes in how they recruit and staff hourly workers to address dire labor shortages over the longer term. Late last year, Walmart rolled out an app that lets employees see schedules, swap shifts with other workers and pick up unfilled shifts. Managers say the system saves up to eight hours a week in scheduling hassles, leaving them more time on the sales floor.
It also fills empty shifts and helps attract and keep workers. Other retailers have adopted similar systems.
Other employers are joining networks that let them share a pool of workers. At Ala Moana shopping center in Honolulu, 65 retailers can tap each others’ hourly employees through software that lets a worker log a shift at one shop one day and another shift at a different store the next day. Since the workers are already screened by the first employer, the hiring process is easier.
For the workers, “You’re able to completely control when you want to work and how much you want to work,” says Melissa Hassett, vice president of client delivery at ManpowerGroup Solutions.
Chico’s FAS, a women’s clothing chain, tested a similar system for its various brands –Chicos, White House Black Market and Soma – early this year and plans to launch it at its stores across the country in early 2020.
“This will allow us to close labor gaps, increase efficiencies and provide career progression within our company to associates,” says Kristin Gwinner, the company’s chief human resources officer.
Some firms are sharing workers across different seasons. A coalition called WorkMyWay, started by Hassett at Manpower, easily lets employees, for example, work at an airline during the winter travel rush, Lowe’s for the spring home renovation season, Coca-Cola in the soft-drink-heavy summer and a large retailer during the holidays.
Temporary employees dispatched to a single assignment are unlikely to return to the business. But if they have a steady flow of jobs throughout the year, they’re more likely to come back annually as they cobble the stints into what effectively becomes a full-time job. Employers save on training and recruiting costs and get a stable of reliable workers in a brutal labor market.