FedEx just painted a disturbing picture of the job market

Yahoo ^ | September 22, 2021 | Brian Sozzi

[lasereye]

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 job 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 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.

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

To illustrate the point on its labor challenges, FedEx shared the current state of play at one of its facilities in Portland, Oregon.

Explained Subramaniam, "Our Portland Oregon hub is running with approximately 65% of the staffing needed to handle its normal volume. This staffing shortage has a pronounced impact on the operations, which results in our teams diverting 25% of the volume that would normally flow through this hub because it simply cannot be processed efficiently to meet our service standards. And in this case the volume that diverted must be rerouted and process, which drives inefficiencies in our operations and in turn higher costs. These inefficiencies included adding incremental linehaul and delivery routes, meaning more miles driven and higher use of third-party transportation to bypass Portland entirely."

[EBH]

I was listening yesterday to some “experts” are discussing this very aberration. The welfare has stopped for many, but they are not going back to work. “Experts” are trying to figure out why?

They think...and that does mean guess...part of the issue is the Child Care Tax Credit people are now getting monthly instead of at tax time. The savings rate sky rocketed during the pandemic by something like 37% is what they said, so many are now living off their savings(dumb move, but it is their life).

There is something else going on and no one is grasping it. It could be that many learned they could live with less, on less, and with the recalibrated budgets due to the pandemic rediscovered the value in time spent with family, friends and loved ones. Couple a recalibrated family budget, mask mandates, vaccine mandates, digital vaccine passports collecting your data, what many parents saw their kids learning via Zoom, and I think people are just not going to be coming back to work very soon. If they come back at all.

The age of consumerism is over. Many may have realized they didn’t need a two income lifestyle. Minimalism was a trend before the pandemic and those toying with the idea found out...it does indeed deliver on a far less stressful lifestyle.

[EBH]

It is not just FedEx though. Take a peek into any service sector and you will find the same thing. One major shopping complex voted best shopping district in America in 2019, has stores cutting hours to 11-7 during the week!

Look around at restaurant ...again some actually closing during the week

Even my tiny sector of pet sitting, we are seeing a boom...but cannot find team members and that caps our business growth. Applicants are bottom of the barrel too. And we cannot hire them as many are not passing the background checks.

[hanamizu]

This isn’t due to welfare.

---

I live in a state that stopped extra unemployment benefits weeks ago. Local restaurants are either closing or greatly limiting their hours because they cannot find waiters/waitresses to work for them. They were hoping when the local university was back in session the shortage would ease up, but so far it has not.

[EVO X]

There is something else going on and no one is grasping it. It could be that many learned they could live with less, on less, and with the recalibrated budgets due to the pandemic rediscovered the value in time spent with family, friends and loved ones.

I'd add that seniors that don't need the money may not want to work because of leaky vaccines. I notice a heck of a lot more seniors on the golf course during the weekdays than before Covid hit..

[Clay Moore]

FedEx just piles my packages, some containing $1000’s of dollars worth of other peoples equipment that needs testing, by the gate out by the busy highway about 1500’ from the house.

Signs asking them to take it to the house are ignored.

[bert]

There is a story going round about truck drivers

The tale goes that recruiters hang out at truck stops and scarf up existing drivers. They offer big bonuses and healthy raises.

As the tale goes, at least one driver took the new job immediately leaving his truck on the lot and calling his dispatcher to come get it

[DoodleDawg]

If the feds would stop all the welfare, people would go back to work.

All the expanded unemployment and rental assistance programs have stopped.

[Tired of Taxes]

It could be that many learned they could live with less, on less, and with the recalibrated budgets due to the pandemic rediscovered the value in time spent with family, friends and loved ones.

I hope so. The two-income-family trend led to a higher cost of living, according to my economics professor back in the 80's. If the average household income drops, maybe the cost of living will, too.

Then again, could the buy-now-pay-later people really have learned how to budget in a year? They might be maxing out their credit cards. Some people always live on borrowed money.

[lepton]

There are also a whole lot of people that have apparently been socking away savings, including a substantial number that have been not paying rent either. This on top of not having the costs of a job, such as car maintenance and gas, and even clothing replacement.

[utax]

“I’ve had things arrive a week to ten days after the estimated delivery. Usually, tracking says the package is within the state. Expected delivery tomorrow. Then it takes another 5-7 days to arrive. Unacceptable.”

FedEx likes to use the “Unable to scan label” excuse to cover for delays.

[cgbg]

Most people are creatures of habit.

Once someone gets in the habit of not working, it is a major challenge for them to start again—they will only do it after they have exhausted all other alternatives.

One of those alternatives is under the table gig stuff, and the labor statistics are not going to find those...

In a third world economy all of the economic statistics are totally useless—the cats refuse to be herded or counted.

They assume that .gov is out to &^%$ them over, and of course they are correct.

[LS]

It’s far more than that. States who have lowered welfare have seen employment rise, but not much.

This is the result of many factors, NONE of which are fixed easily.

[LS]

I”m still here, so it didn’t.

[LS]

It’s more than unemployment. Yes we see a LITTLE increase in employment in states where unemployment bennies are lifted, but not a lot.

a) Demographic trends are not good. Low birth/marriage rates in EVERY country in the world, yes, including China (US is now, or will be in 2 years, YOUNGER than China);
b) a China Virus lockdown mindset/fear that convinced people to stay at home
c) I’m wondering if some (many?) of these jobs weren’t second jobs? Wouldn’t change the fact that people have MORE bills to pay with inflation, but still, it does require a higher work ethic to do a second job;
d) constant propaganda about “meaningful work” which is ridiculous. The definition of WORK is the opposite of PLAY.

[Tired of Taxes]

Good point.

[Georgia Girl 2]

Last week we were at the deli counter in Kroger and the lady slicing the meat seemed to be having a bit of trouble working the slicer. She laughed and told me she was the Boarshead rep and just helping out because they were short handed. Then yesterday in the paint dept We noticed that two of the Sherwin Williams vendors were stocking their paint on the shelves but stopped long enough to put two cans on the shaker for us and a couple other people. We were remarking on the way home that there must not be anybody working.

[EBH]

Not just seniors, but many late season boomers looking at the working landscape and deciding it is not worth going back especially to a woke business world. They did their homework for potential early retirement, becoming sole proprietors, etc.

There is a major shift and if democrats go after their wealth …things could look really grim. Many boomers don’t want any part of this new great society

[Georgia Girl 2]

The Kroger manager recently told Mr. GG2 that he hired five people and only one reported for work and did not come back the next day because the work was too hard.

[GaryCrow]

Yeah, the monthly $300 that the feds were paying not to work ended shortly after Labor Day.

It was $300 a week, not a month. That's on top of the state unemployment also. Then there's the eviction moratorium, plus all the extra money for having kids. Add it all up and even with the $300 a week unemployment going away the non-working are still taking in a LOT of government freebies.

Fedex stock took a hit yesterday because the profits were down due to the extra payroll costs. What they're not saying though is that Fedex's profits are still through the roof, it's been that way since Covid started. They're just having to pay more for workers than they want to pay. They're still making a metric chit-ton of money though.

[Tired of Taxes]

I don’t doubt that story. lol

All sorts of crazy things always happened in retail - employees arrested, employees walking out, not calling out, not showing up, never showing up again, etc.

Without a doubt, the situation must be worse now.