That should be obvious. While current unemployment data is confusing at best, and may be obscuring the probability that the U.S. is looking at a longer term labor shortage, employers should be recognizing the long-term importance of being an employer of choice.
Jeff Bezos, the CEO of Amazon, one of the country’s largest private employers, gets it. In a recent letter to shareholders, he commented on the need to find a better vision for how the company can create value for employees and a vision for their success. Amazon employs approximately 1.3 million workers, of which some 500,000 were recently hired, in part as a response to the pandemic driven increase in demand for delivery services.
Amazon, not surprisingly, believes that its pay scales and benefit packages are competitive. A recent unsuccessful union organization effort in Alabama, and its ability to significantly add to its workforce, tend to support that view.
Nationally, employment data can be viewed as confusing at best. Monthly unemployment data suggest that there is a good supply of available labor. However, there is also a record number of unfilled employment openings and a short walk in your neighborhood makes it clear that there are help wanted signs in front of almost every business.
Currently, while unemployment seems high, with some 10 million unemployed and more than 17 million Americans still receiving unemployment benefits, many employers are having trouble finding enough workers. This may be partly due to a skills mismatch, Covid-19 related fears by potential job seekers, and a lot of free government money. Higher pay may not fully resolve all of these issues.
Investors should note that higher labor costs are born by consumers and/or capital.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®