retail news in context, analysis with attitude

Bloomberg has a story about how, while service industries (restaurants, hotels) often are singled out as being hardest hit by the national labor shortage, the numbers suggest that the manufacturing industry has been hardest hit.

And it is getting worse - especially because of Walmart and Amazon, which "continue to raise their pay to be competitive in a tight labor market. We're used to America losing manufacturing jobs because companies can find cheaper workers abroad, but perversely, we might begin losing more of those jobs because factory owners can't offer what service employers can."

Bloomberg goes on:

"Manufacturing wages have gone up by 0.5% per month for four consecutive months — that hasn't happened since 1981.

"But as Walmart and other service sector employers have shown, they're not resting on their laurels, either, continuing to raise wages and benefits as needed in order to fill their positions.

"That’s putting manufacturers in an unexpected competition with service employers for workers. Amazon likes to quote its average starting wage of $17 an hour at fulfillment centers in Michigan that comes with a host of benefits, a package that's likely better than a lot of entry-level or lower-tier manufacturing jobs for similar work. Thursday, Amazon upped the ante again, announcing that it will pay for some U.S. employees to get four-year college degrees.

"A whole host of retailers pay $15 an hour or more — Walgreens announced it would do just that last month — and offer working conditions that are likely more comfortable and less hazardous than being on a factory floor. Would you rather make $15 an hour working at a sawmill or inside a Home Depot?

"This is one reason manufacturers will end up embracing automation: They just can’t find a way to make jobs good enough to attract the workers they need relative to their ever-escalating service economy competition."

KC's View:

An example of the wages pressure being created came this morning in a Reuters story about how Amazon "has increased its average starting wage in the United States to more than $18 an hour and plans to hire another 125,000 warehouse and transportation workers … The world’s largest online retailer has raised pay from around $17 since May. In some locations, the company is giving signing bonuses of $3,000, said Dave Bozeman, vice president of Amazon Delivery Services, or triple what the company offered four months ago."

By the way, it isn't just manufacturers embracing automation.  I'll be moderating a panel discussion at next week's National Grocers Association (NGA) show in Las Vegas (full vaccination or recent negative Covid test required for attendees) that will focus expressly on in-store automation at both the front and the back of the house.

Which is the way things seem to be trending at the moment.