If pallet companies could ask Santa Claus for one gift, it wouldn't be lumber, cores, nails or even more customers, but productive workers. While the industry has been plagued for at least the last five years with a shortfall of production workers, the problem has gone from bad to worse to a nightmare in 2022. Unfortunately, that’s why the labor crunch is the Pallet Enterprise Story of the Year for 2022.
While the nation as a whole has worker shortages for everything from restaurant staff to truck drivers and nurses, the pallet industry is in an even tougher spot due to the physical demands of the work. According to the U.S. Chamber of Commerce, if every unemployed person in the country found a job, there would still be four million open positions. The labor force participation rate is down compared to 2020. A U.S. Chamber survey of employed workers in May 2022 found that two thirds (66%) of Americans who became unemployed during the pandemic say they are only somewhat active or not very active at all in searching for a new job.
What else did this U.S. Chamber survey discover about unemployed workers? Nearly one in five respondents has altered their livelihood: 17% have retired, 19% have transitioned to being a homemaker, and 14% are now working part-time. Almost a quarter (24%) say government aid packages during the pandemic have incentivized them to not actively look for work.
Younger respondents, aged 25-34, are prioritizing personal growth over searching for a job right now; 36% say they're more focused on acquiring new skills, education or training before re-entering the job market. About half (49%) are not willing to take jobs that do not offer the opportunity for remote work. Twenty seven percent indicated that the need to be home and care for children or other family members has restricted their ability to return to work. These survey results point to changing priorities for workers. They are looking for more flexibility, and that is something that most pallet jobs just can't provide. You can't really produce or repair pallets from home.
Demographic changes in the population are also a major factor in the labor pool. The U.S. workforce is aging, and Baby Boomers are reaching retirement. This was a problem in the past. But COVID and other health concerns have pushed more people to retire. These may not have been production workers. But they may be truck drivers, maintenance guys, foremen or sales staff. School and childcare concerns have also drawn some women out of the market.
Family formations and couples having fewer children are starting to impact the current and future labor pools. A recent study by the Pew Research Center surveyed over 3,800 Americans ages 18 to 49. It found that among non-parents in this age group, 44% said it's not very likely or not likely at all that they will have kids someday. That figure has risen by 7% since a similar survey was conducted in 2018. More than half of respondents (56%) just do not want kids. Since 1950, the worldwide fertility rate has dropped from an average of 4.7 children to 2.4 children. These demographic trends suggest that the long-term worker situation is not going to get better without a change in Americans' attitudes toward having children or an influx of immigration.
Some pallet companies have complained that it is hard to compete with free money from the government. During the early days of the pandemic, it was estimated that 68% of workers were earning more on unemployment than they did while working, according to a report by the National Bureau of Economic Research published in 2020. While the gravy train for all the extra COVID-related unemployment pay may be over, many potential workers have found ways to save money, do freelance work or simply work just enough to pay their bills. You ask them, "Don't you want to work more and earn more to get ahead?" Several executives from pallet companies have told me that, unfortunately, some workers aren't interested in getting ahead. They are only thinking about today.
So, we know what the problem is. What are some solutions? First, all pallet and lumber companies need a labor strategy. And that is more than just offering a referral bonus or putting more information about your company on your website. Unfortunately, way too many companies haven't even done that. A labor strategy involves everything from improving your workflow, to reducing manual touches, using ergonomics to limit the wear and tear on production workers to offering more benefits and developing better, more responsive workplace cultures. Your labor strategy should include automation and finding ways to make jobs easier so that more people can do them.
Using social media to get the word out that your company is a good place to work is important too. Make sure communications are in the languages that are prevalent in your community. Offer referral bonuses for new hires that stay on after 30 days. Consider working with temp agencies or local nonprofits that assist immigrants or others looking for basic laborer jobs.
Some companies are even helping people relocate and find housing or childcare. You have to find out what keeps people from staying or working for you in the first place and eliminate those obstacles as much as possible. The most important thing is to do something. Otherwise, you won't be ready when the situation gets even worse. Yes, I think it will get worse, just not in the next six months or so.
In the short term, the pallet and lumber industry may see labor improve for a number of reasons. The Democrats' open border approach is allowing in millions of illegal immigrants. Some of these people will find work in the pallet sector, especially for small companies. A looming recession could lead to more layoffs, which means more people looking for work. Contraction in the retail and construction sectors means more people who need a job. Pay scale growth is constrained by slow economic growth. This trend may make pallet jobs more attractive to some. Looking into a crystal ball, the only thing I know for sure is that having a labor strategy is the best play.
