I’m sure you have seen the recent jobs report and while Wall Street is writing it off as an anomaly and the usual correction from the Labor Department will fix it, there may be some other subtle but fundamental shift going on that we need to keep front and center. There is of course a school of thought that says that the generous benefits are keeping people from working. While not commenting on the politics of that, it is worthy to note that those benefits are keeping people at home (and socially distanced) thus buying extra time for the pandemic control effort and those benefits are keeping the demand in the economy going also. The reason for this discussion is that the labor shortage is impacting every single supplier of yours (or will soon); it will impact your company and your organization.
Here are a few points to start thinking about. Let’s look at some short-term implications first. Clearly, the fear of going back to work and getting infected is having an impact and till most people get vaccinated, that will linger. Lack of the child-care supply chain coming back is causing many people from being able to come back. Same with schools. And by the way, unfortunately but predictably this is having a much bigger impact on women-they actually lost thousands of jobs in this last job report.
In the longer term, the kinds of jobs being filled is also changing. Our client had to resort to remote inspections by camera at some critical suppliers during the pandemic and not only has made that permanent but has also incorporated it into their relationship with their customers. Voila – no more QA inspectors traveling all over the world on both sides of that supply chain! This is happening in many industries. Conversely, people are rethinking what they want to do, some having been forced into other jobs during the pandemic. People are also reassessing their relationship to work, and this is no insignificant thing. Many have gotten to like working from home and are not willing to give it up – at least not totally. Many of our client have already set in motion a move to a formal hybrid model and are reassessing their office space requirements and are divesting space.
And while some industries are raising their wages to attract more people (restaurants), they are finding that other industries (warehousing) are raising their wages even higher. According to the Washington Post, “Economists describe this phenomenon as reallocation friction, the idea that the types of jobs in the economy are changing and workers are taking a while to figure out what new jobs they want — or what skills they need for different roles.” And by the way, the Guardian reaches mostly the same conclusions but also goes a step further: “could lead to a once in a generation or two generations increase in wages and reduced unemployment rates”. They note that this happened in the 90’s and it’s actually a good thing since labor has been losing ground for many years.
What all this means is that your Category Management strategies need to reflect these implications to the extent that they are relevant for your suppliers. You also should be factoring all of these in as you think about your organizational plans over the next few years. Developing a short presentation on the topic based on some specific and relevant research and sharing it with your Stakeholders would go a long way in establishing a more strategic role?