Is Amazon a harbinger on labor, or an outlier?

Amazon has been having some hiring woes. A leaked memo revealed that the world’s second largest private employer after Walmart was worried that it would run out of available US warehouse labor by 2024. It made that forecast based not on the entire US labor force but on a specific supply of workers it deems eligible or likely to work at its fulfillment centers, based on demographics and location data.

Meanwhile, in the short term, the company hired too many workers in early 2022, in part to cover for employees who caught covid. That came after a spell in which the company found itself understaffed, and was struggling to find enough workers for its sprawling network of warehouses across the US — adding 270,000 workers in the second half of 2021.

The latest jobs report from the US Bureau of Labor Statistics shows that the boom in transportation and warehousing jobs continued in June. The biggest increase came from warehousing and storage, illustrating the staying power of delivery, as the pandemic has re-shaped how we buy and receive just about everything.

The jobs, and the pay raises, are in warehousing and storage

Meanwhile, wage growth for workers in the transportation and warehousing industry is in the double digits, showing that employers are raising wages to attract and retain people. It’s hard to see Amazon laying off its fulfillment workers, as it’s not an easy job. Turnover rates at Amazon can top 100%. For Jeff Bezos, Amazon’s founder, worker turnover is baked into the employment equation; in his view warehouse jobs do not need extensive training, so the company can hire and lose workers in a constant cycle, reported the New York Times.

There’s no guarantee that the growth in fulfillment jobs will continue in the same direction for much longer. For now though, the strong demand for transportation and warehousing workers fulfilling our shopping needs is a bullish sign for the overall US economy. In June, the US labor market added 370,000 jobs, at a time when recession fears are growing and with the Federal Reserve raising interest rates to bring inflation under control.

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