FedEx just painted a disturbing picture of the job market

[mahatmakanejeeves]

Yahoo Finance

FedEx just painted a disturbing picture of the job market

Brian Sozzi · Anchor, Editor-at-Large
Wed, September 22, 2021, 12:04 PM

Do a read through of the disappointing earnings report out of FedEx on Tuesday night and you get the sense non-farm payrolls reports for the rest of 2021 may surprise economists to the downside.

The problem (one that may be getting worse, per FedEx)? Finding humans to accept jobs in a very tight labor market even at higher rates than what the specific job would have paid months ago.

"The impact of constrained labor markets remains the biggest issue facing our business as with many other companies around the world and was the key driver of our lower than expected results in the first quarter," FedEx COO Raj Subramaniam told analysts on an earnings call.

FedEx (FDX) said its quarterly results were drilled by $450 million due to labor shortages alone, notably at its ground segment. The company estimated a shocking 600,000 packages across the FedEx network are being rerouted because of the inability to find labor.

Those processing bottlenecks stand to wreak havoc on the holiday season if FedEx is unable to address the worker shortage, which increasingly appears unlikely.

{snip}

[AlexSFCA]

1. raise pay, increase benefits and offer sign on bonuses

yea, service cost will increase to consumers.

[Hugh_Lebowski]

2. My assessment of causes goes as follows ...

1) Immigrants being deported and/or not let in, and many going 'underground' to avoid deportation
2) Extra UI money, stimulus money, and money saved by people being allowed to work from home (it really does save a lot of money working from home), in various combinations, have increased peoples 'cushions' and made them less dependent on 'some job/any job'
3) Increased property values have allowed a lot of younger people to sell their houses (with very nice profits) and move back in with parents, and/or move to their parents homes after their parents passed away, often from COVID.
4) Lower interest rates have caused a wave of refinancing that has lowered people's mortgage payments, which has made them less dependent on 'some job/any job'.
5) Eviction moratoriums
6) Birth rates are, surprisingly, down. This also creates less urgency for some people to 'provide'.

[Mary in S. Carolina]

4. I would add in the Opiate and Drug Addiction

and Covid has forced some women/men to stay home to home school and daycare.

[Hugh_Lebowski]

5. Dunno if I agree on the former, but the latter, yes, good point ...

Closed/limited schools means a portion of potential laborers (i.e. parents who could work while kids are at school) are ... no longer available.

I've not seen anything suggesting opioid (or other drug) addiction rates are particularly up during this pandemic. I have, however, seen talk that alcohol consumption is way up.

Then again, alcohol IS a drug, period

[PoindexterOglethorpe]

9. It is not at all surprising that birth rates are down.

They've been declining in nearly every single country in the world.

[Hugh_Lebowski]

10. Fair enough but there was some predictions shared early in the pandemic

and lockdown period that birthrates would rise (months later of course) due to both necessary parties being at home, together, a lot more of the time than usual.

Didn't happen.

Maybe there were too many sweatpants

[PoindexterOglethorpe]

11. There is this weird myth out there that nine months after

things like power outages, there's a sudden increase in births. That's apparently not true and never has been.

[PoindexterOglethorpe]

3. Is FedEx making a profit?

What do they pay their CEO and the like? Maybe those people could take a pay cut and raise the pay of the lower level workers.

It's odd, isn't it, that those complain the most about people not being willing to work for crap wages have never themselves worked for those crap wages.

[Scrivener7]

6. This. Pay the rank and file and all these problems will go away.

[Farmer-Rick]

12. Good point. No shortage of CEOs, board members or executives

Out there.

Seems it's just mostly the lowest paying jobs that have shortages. Usually when this happens the filthy rich bring in the starving poor from other countries and pits them against citizen workers. But what with all the anti-immigrant nastiness spewed out with the rise of the GOP white supremacists, they are not rushing here. And the Neo- Nazis are actively preventing some from coming in.

Not to mention the possibly 1 million Covid-19 dead that took out a bit of the labor force and scared off a lot of the workforce.

[MenloParque]

7. Easy. Increase pay

I was just talking to my FedEx driver who delivers daily in San Francisco Financial district. He drives in 2 hours every morning and 2 hours back in the evening because he can’t afford to live in the city he was born and grew up in. He makes $60k a year…that won’t get you even a studio apartment in San Francisco! The poverty line is $82k a year for an individual in SF.

[modrepub]

8. I Predict

lots of study by smart economists and social scientists that will generate reams and reams of analysis. Then politicians and talking heads with come up with their own oversimplified analysis which will be something like "it's poor people's fault and we mush punish". No one will blink and eye since it's all what they want to hear and believe anyway.