Low unemployment is great for everyone, right? (Not so much in logistics…)
Unemployment levels are at an all time low. Economists are trumpeting about the economy, and how great this is for everyone. Employers added 228,000 jobs in November, while the unemployment rate remained at a 17-year low of 4.1%, the government reported in December. The report also showed that on average weekly paychecks increased by 3.1% over the last 12-months, the first time that reading has topped 3% in nearly seven years. But much of that gain came from Americans working longer hours. Average hourly pay increased 2.5%.
The Bureau of Labor Statistics noted that in May 2017, unemployment rates in seven states were at their lowest levels since the state unemployment data series began in January 1976. Colorado had the lowest unemployment rate in May, 2.3 percent, followed by North Dakota, 2.5 percent, both of which were the lowest rates ever recorded in those states. The rates in Arkansas (3.4 percent), California (4.7 percent), Mississippi (4.9 percent), Oregon (3.6 percent), and Washington (4.5 percent) were also at series lows
Isn’t this great!! Well actually…no….just ask anyone who works in the logistics sector, especially if they rely on contingent workers. As we’ve noted in previous posts, contingent workers are the folks who come in to work in warehouses, on trucks, and distribution centers, and who keep the packages coming in from all of those Amazon orders you place online. And they are becoming harder and harder to find. And when you find them, you hope they will pass the drug test (required for working around heavy machinery), and you hope they will stick around (most leave after a few weeks for other jobs). And people are scratching their heads. How do we find workers for these jobs? Should we be paying them higher?
Higher pay is most certainly not the answer. I was exposed to this thinking when I recently had the opportunity to meet with Tara Greene, from The Greene Group in Charlotte, NC. The Greene Group is a staffing agency focused on the logistics sector, specifically identifying trained professionals for the warehouse, transportation, and truck driver segments. Their operations include StrataForce continent work management, as well as Road Dog Team, which works with the market for truck drivers.
Tara and her colleagues at Greene Group (GG) have identified and developed a new business for the staffing and contingent worker segment that is unique and unlike any others today in the field. With unemployment at an all-time low (4.1%) in 2018, and shortages of qualified truck drivers and warehouse workers, GG has identified that the key to creating a reliable workforce is not through increasing wages, but to offer a new benefit to workers: FLEXIBILITY. There is an estimated shortage of 50,000 truck drivers at any given time in the US supply chain network. Additional survey data suggests that 72% of contingent workers choose to remain contingent, and that only 42% are contingent because they feel they have to. Anecdotal experience suggests that 50% of Uber drivers are full-time. There is clearly a trend going on which is being enabled by the “Uber” economy and the enabling technology allowing people the opportunity to work how and when they want to. This may be part of a movement towards increasing desire for “entrepreneurial mindsets” that involve controlling one’s destiny, enabled by digital marketplaces.
GG supports many large companies, including Stanley/ Black and Decker, and several large trucking companies, through their online scheduling platform “MyWorkChoice”. This app has created a community of 100,000 contingent workers and drivers that interact with the work schedules created by employers, to provide a reliable source of labor for companies that have shifting demand requirements for labor. This business model is part of an economic and demographic change towards what has become known as the “Gig Economy”, referring to the fact that skilled workers want to work at times that is convenient to their schedule, and are not necessarily committed to working for a single company for an extended period of time. For example, IDEA acquired TaskRabbit, which allowed them to hire individuals on a contingent basis to assemble their furniture. Amazon Flex is emerging as a way for people to sign up to delivery packages on their time off. Due to the large numbers of people willing to work part-time or temporary positions, the result of a gig economy is cheaper, more efficient services (such as Uber or Airbnb) for those willing to use them. Those who don’t engage in using technological services such as the Internet tend to be left behind by the benefits of the gig economy.
In light of all these shifts, the GG has approached the Supply Chain Resource Cooperative as a partner to help them drive improved visibility, education, and document what is happening in the Gig Economy. Stay tuned!
