Inflation Is Back, Part 8: Labor Shortage Reaches “Critical” Point
By: John Rubino
GoldSeek.com
Sunday, 8 July 2018
Economist Peter Bookvar recently analyzed the the anecdotal evidence of capacity constraints piling up in recent industry surveys, including the following:
“Business is strong in all regions. Materials are tight. Trucking continues to be a major challenge.” (Chemical Products)
“Strong economic growth continues to put pressure/strain on capacity, lead time, availability and pricing across a broadening array of commodities and components.” (Computer & Electronic Products)
“Electronic component supply issues continue to disrupt production.” (Transportation Equipment)
“The Section 232 steel tariffs are now impacting domestic steel prices and capacity. Base steel prices have already increased 20 percent since March.” (Fabricated Metal Products)
“Transportation costs are going through the roof right now, which definitely impacts the decisions we’re making with regard to quantities we’re bringing in versus truckload and LTL.” (Furniture & Related Products)
“The economy and product demand still continue to be strong. Having trouble finding people [to fill] blue collar positions. Lead times for parts and materials are moving out, and we are seeing commodity cost pressures increases with the threat of tariffs. Additionally, suppliers are asking for more price increases.” (Machinery)
The frequency of “transportation cost” complaints is both hard to miss and important, since pretty much everything has to be transported before it’s sold. Part of this is due to higher gas prices. But a bigger part is the fact that there aren’t enough drivers to operate the required number of trucks: From a recent Zero Hedge article:
“These Guys Are Like Diamonds” – America’s Trucker-Shortage Hits A Crisis Point
Nearly every consumer product – from food, to textiles to electronics – sold in the US at some point touches the bed of a truck. Which is why the shortage of truckers to ferry goods across the US has become such an intractable problem for American companies – and unemployment at 3.8% isn’t helping.
A shortage of workers is forcing trucking firms to raise wages and provide other incentives as they seek to fill an “official” shortage of 60,000 jobs that some industry insiders say is really closer to 100,000.
And as companies become more desperate, they’re willing to take a look at applicants who never would’ve had a chance under normal circumstances, according to the Washington Post.
“As long as you can get in and out of a truck and pass a physical, a trucking company will take a look at you now,” said Tish Sammons, the job placement coordinator at TDDS, whose desk is full of toy trucks and fliers from the companies that call her daily begging for drivers. “I recently placed someone who served time for manslaughter.”
Wages listed in a recent Washington post story on the trucker shortage noted that salaries ranged as high as $80,000 a year – plus benefits. And some companies say they’re considering raises because that still isn’t enough to appeal to young people. Already, WaPo says, companies like Amazon, General Mills and Tyson Foods are passing higher transport costs onto consumers. Wal-Mart even identified rising transportation costs as the biggest “head wind” facing the company.
Even companies that don’t require their drivers to go “over the road” – that is, make long-term hauls – are struggling to recruit.
“These guys are like diamonds right now,” said Jason Olesh, a vice president at Aim Transportation Solutions who left his family vacation to rush to TDDS to talk to students. “We’re down 90 drivers across our fleet of 650.”
The worker shortage has, unsurprisingly, led to a wave of poaching that has sent the industry’s turnover rate to 94%. At this rate, companies and consumers better hope that Elon Musk succeeds with his goal to launch a fleet of autonomous trucks several decades ahead of schedule.
And apparently it’s not just truckers. The recent slowdown in private sector hiring wasn’t due to fewer jobs, but a “critical” shortage of workers:
The U.S. labor shortage is reaching a critical point
The Rest…HERE
