Retailers, Shipping Companies Want One Thing for Busy Holiday Season: Workers

This holiday season, it's retail companies who are sending out a wishlist, and all they're asking for is seasonal workers during one of the tightest markets in decades.

But those companies are unlikely to find the help they need, which is expected to negatively impact the consumer shopping experience as unstaffed store aisles and online orders taking longer to fill.

According to the Labor Department, job openings are plentiful, giving workers freedom of choice with about 10.4 million openings at the end of August and 11.1 million in July. That's the highest on record since about December 2000, when the government started collecting data on that figure.

People are also quitting their jobs in record numbers, which the Labor Department estimates at 4.3 million in August, a 4 million increase since the month prior.

"I've never seen a market like this," said Matt Lavery, UPS's global director of sourcing and recruiting, who has worked on the hiring side of the package delivery company for 24 years. "Normally when you're talking about people coming off unemployment benefits, you see surges in candidates. We're not seeing those."

For more reporting from The Associated Press, see below.

Holiday Hiring
Retailers in the U.S. are desperately seeking workers before the busy holiday season begins. Above, a sign for potential hires stands next to the door to a Hy-Vee grocery store in Sioux Falls, South Dakota, on October 7, 2021. David Zalubowski/AP Photo

Even before the holiday hiring season, employers were so desperate to find workers that they raised pay above $15 an hour, started offering four-figure sign-on bonuses and promised to pay their schooling. But that yielded only limited success. If they can't find the workers they need in time for the holidays, employers will likely rely on existing staff to work more overtime, which can become costly for businesses and lead to burnout for workers.

Enhanced unemployment benefits, which included a $300-a-week federal supplement as well as programs that covered gig workers and people who were jobless for six months or more, ended in early September. That cut off aid to roughly 7 million people. So far, though, the termination of those programs appears to have had little effect on the number of people looking for work.

To snap up available workers as fast as it can, UPS is trying a new tactic: Hire in 30 minutes or less. Taking too long to hire can mean an applicant may go elsewhere. So the company has nearly done away with interviews and does the whole hiring process online.

Not having enough workers can be costly for companies. FedEx said it spent $450 million between June and August due to higher wages, paying overtime and other costs related to the tight job market.

At one of its hubs in Portland, Oregon, FedEx has about 65 percent of the staff it needs. The company has been diverting about a quarter of the packages that would normally flow to other hubs farther away that can handle it. More than 600,000 packages a day are being rerouted, leading to worsening service, said FedEx Chief Operating Officer Rajesh Subramaniam President, during a call with investors last month.

FedEx said it needs 90,000 holiday workers this year, 20,000 more than last year. Others are hiring around the same levels as last year: Amazon, UPS and Walmart, each of which is currently trying to hire 100,000 people or more.

There are many reasons why workers are in short supply, but they mostly revolve around the pandemic. The Delta variant has made people fearful of working in tight spaces with others, and most major employers that hire hourly workers haven't mandated vaccines for them yet. Child care issues leave people needing to stay home, and many have been saving money during the pandemic, giving them enough cash to avoid taking jobs they don't want.

Another potential wrinkle: President Joe Biden's announcement in September that employers with more than 100 workers will have to mandate vaccines or offer weekly testing. It's unclear when those rules will start or how that would affect hiring. Companies that have already mandated vaccines have reported high rates of vaccinations. And a fully vaccinated workforce could make that employer more attractive to workers fearful of catching the virus. But some employers fret that the mandate could complicate hiring further.

Some wonder whether employers that need holiday help will be able to find workers in time.

"It doesn't look good," said Andrew Challenger, senior vice president at hiring firm Challenger, Gray & Christmas, which predicts retailers will add 700,000 workers during the holidays this year, 36,000 fewer than last year.

At job site Indeed, searches by people looking for seasonal work were down 13 percent the week ending October 10, compared to the same period a year ago. And those searches were down 27 percent from 2019 before the pandemic began.

"The job seeker interest is sluggish," said AnnElizabeth Konkel, an economist at Indeed. "It's just not taking off."

Those already working in stores, warehouses and package delivery companies may work longer hours.

Target said it will hire 100,000 holiday workers this year, about 30,000 less than last year, but will give 5 million additional hours to its existing workforce, potentially pumping $75 million more into workers' paychecks. Target employees are already working nearly 15 percent more than last year, but the retailer said they are asking for more hours. Target, which already pays workers at least $15 an hour, is planning to give store workers an extra $2 an hour if they work weekends and other busy days closer to Christmas.

Craig Rowley, who works at the retail and consumer goods team at management consulting firm Korn Ferry, said if employers can't find the workers they need, online orders could take longer because there won't be enough people to pack orders or deliver them, especially as it gets closer to Christmas and more shoppers head online. And stores are likely to do away with late-night or overnight hours since retailers will want their existing staff to work when stores are busiest.

"You're not going to see the wild extended hours because they just can't staff it," Rowley said.