Labor Crunch in the USA
BY AJINDER HANDA, NCASEF VICE CHAIRMAN, PRESIDENT, GREATER NORTHWEST FOA
We are facing a dilemma: the labor pool is shrinking rapidly. This has been happening in Japan for many years, but now labor problems in Japan are peaking. The same phenomenon is occurring here, and it could be decades before we ever come out of it. Across the nation in industries as varied as trucking, construction, retailing, fast food, oil drilling, technology, and manufacturing, it is becoming increasingly difficult to find s u f f i c i e nt help. With the booming economy growth and retiring baby boomers, the labor crunch is about to get worse.
The labor shortage is a unique sort of problem—easily predictable years ago, but still a surprise. That is largely because of the 2007-09 recession, which sparked a longer-than-usual employment slump. The jobless rate was above 5 percent for more than several years, during which labor was cheap and abundant. Employers had little incentive to prepare for tighter labor markets by upgrading their machinery or processes, which might have boosted productivity. The U.S. unemployment rate fell to 3.8 percent in February 2019 from 4 percent the previous month, and is below market expectations of 3.9 percent. The number of unemployed persons decreased by 300,000 to 6.2 million.
The point is: Does anyone want to work in retail these days? It is a big question for us as 7-Eleven franchisees. And, the biggest question is what has our franchisor done to mitigate this situation? I have approached my local SEI team and asked the very same question. They responded by saying that we can alleviate this situation by increasing sales and using traffic drivers. None of these solutions have helped franchisees so far. SEI is bringing more labor-intensive programs that really cost franchisees more and more rather than making money. My local SEI team’s second response is that they cannot help us with labor issues because of the joint employer relationship situation.
Some big companies like CVS, Walgreens, and Target have found the answer. They have announced pay hikes and bonuses. They are using the benefits of tax reforms, etc. I know SEI cannot help franchisees because of the joint employer relationship situation, but SEI can reimage and upgrade our ancient stores. Also, they can help us by observing write-offs. There are many other ways to help franchisees so they can pay their employees handsomely and be able to retain good workers, who eventually help elevate the 7-Eleven image.
The bottom-line is SEI management must open their eyes and take care of this situation as soon as possible. Otherwise, this system, which depends upon strong franchisees, will fall.