"We Track the Financial Collapse For You, so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Safeguard your financial future. Get our crucial, daily updates.

"We Track the Financial Collapse For You,
so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Inflation Is Back, Part 8: Labor Shortage Reaches “Critical” Point

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

America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying.

A report Thursday from ADP and Moody’s Analytics cast an even brighter light on what is becoming one of the most important economic stories of 2018: the difficulty employers are having in finding qualified employees to fill a record 6.7 million job openings.

Truck drivers are in perilously low supply, Silicon Valley continues to struggle to fill vacancies, and employers across the grid are coping with a skills mismatch as the economy edges ever closer to full employment.

“Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement. “These labor shortages will only intensify across all industries and company sizes.”

The reason for the tick down in hiring certainly isn’t because there aren’t enough jobs.

The Bureau of Labor Statistics reported that April closed with 6.7 million job openings. May ended with just over 6 million people the BLS classifies as unemployed, continuing a trend this year that has seen openings eclipse the labor pool for the first time. At some point that gap will have to close. Economists expect that employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.

“How much might rising labor costs chew into corporate profits? How much will be passed through to customers in the form of higher prices? That remains to be seen,” Baird said. “Rising labor costs will boost take home pay, but we’re also all likely to see the effect in rising prices for goods and services.”

Historically this stage of the cycle is a point of no return. It doesn’t “moderate” because any further growth by definition means more demand for the inputs that are already in short supply. So from here wages and prices can only rise, which causes interest rates to follow suit until the latter slow the economy sufficiently to bring demand and supply back into balance.

If the next recession is not yet visible, it’s definitely out there on the road we’re now traveling.

 

Emigrate While You Still Can

5 thoughts on "Inflation Is Back, Part 8: Labor Shortage Reaches “Critical” Point"

  1. It is the same situation that repeats every few years.The Gouvernment ,employers and parents are out to lunch with reality.
    All go on with their own agenda…..until we are in that the situation.
    In this age of communication why does this have to happen?
    Teachers are only interested to keep the students in school until the are ready to get married.
    We are pumping out teachers like hot buns,regardless that there is already a big surplus.There is also the declining Birthrate
    If you still in school at 25 and do not know what you want to do in in life..well you become a teacher with NO changes of a job,but there is always openings in the food and retail business.
    Minimum Pay and no benefits of course.
    That brings me to the parents,Mothers in specific,their “Baby” has to become a Doctor or Lawyer. Fathers are better keep quit since their solution is to harsh.
    Industry is not interested to work with the Gouvernment due to lack of efficient departments.

Leave a Reply

Your email address will not be published. Required fields are marked *


Zero Fees Gold IRA

Contact Us

Send Us Your Video Links

Send us a message.
We value your feedback,
questions and advice.



Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.

This field is for validation purposes and should be left unchanged.