9/4/2023 0 Comments Fedex turnover rateLow turnover reduces UPS’s need to hire and gives the company operational stability.Īmazon and FedEx offer lower pay and less upward mobility. This gives UPS drivers good reason to stay on the job, and their average tenure is 16 years. And annual wage increases are guaranteed by a multiyear collective bargaining agreement. How much do UPS’s unions contribute to its success? Well, they have secured some of the highest wages in the industry for their drivers: $36 an hour on average. “The impact of constrained labor markets remains the biggest issue facing our business,” FedEx’s president, Raj Subramaniam, said. In large part due to these costs, Amazon’s profit declined nearly 50%. Amazon incurred $2 billion in additional hiring costs and lost productivity, and anticipates spending twice as much in the fourth quarter. Profit declined on a year-on-year basis, and the company lowered its financial projections. The labor shortage cost FedEx nearly half a billion dollars, primarily in lost productivity due to understaffing. Nonunion FedEx and Amazon did not fare as well. When investors asked CEO Carol Tomé about the labor shortage, she seemed genuinely unconcerned: “I feel really good about our ability to manage through the labor cost inflation that many companies are struggling with today.” Operating profit was up more than 20% year-on-year, and the company raised projections for its full-year results. Unionized UPS had a very strong third quarter. What will this mean for businesses? Recent financial results from the country’s best-known delivery companies give us a preview. Financial performance at Amazon and FedEx, versus UPS demonstrates the value unions can bring Absent a dramatic change in immigration policy, Long Covid healthcare, or support for working mothers, experts agree that hiring is likely to remain a challenge in the future. The overall labor force participation rate-the percentage of the population working or looking for jobs- is shrinking. Instead, researchers point to a newfound unwillingness to tolerate low pay and poor working conditions a lack of access to childcare, which keeps many mothers at home concerns about getting Covid demographic trends, including an aging population, many of whom retired early tight immigration policy and, increasingly, mounting disability due to long Covid. It is now clear that the labor shortage was not caused by generous temporary pandemic unemployment insurance. Starbucks has had to reduce hours at certain stores due to insufficient labor, while Macy’s is sending corporate employees to cover shifts in stores. High-turnover companies are understaffed, taking a heavy toll on operations and profits. At a company like Amazon, which has an employee turnover of 150%, that can add up to billions of dollars each year.Īs long as new hires are plentiful, a low-pay/high-turnover model can be profitable. Even in a normal labor market, the cost of replacing a single low-wage worker is around 20% of annual pay that includes direct hiring costs and the lost productivity that comes with turnover. A combination of better pay and benefits, more upward mobility, and the ability to exercise voice gives unionized workers reason to stay.Įmployee retention is critical right now, with job quits at historic highs and millions of roles unfilled. But unions also make employees less likely to quit their jobs. It’s true that higher wages and better benefits can be costly for employers if not accompanied by higher productivity. What is less well known is that unions can be good for business too. Union members earn 11% more than nonunion peers, and unions help secure critical benefits such as paid sick leave, health and safety protections, and job security. Many people know unions are good for workers. By driving employee retention, unions can be good for business-particularly when the labor market is tight In this labor environment, union-busting may be the wrong business strategy. With workers quitting jobs at record rates and employers struggling to hire, unionized companies have a major competitive advantage: their workers stick with them. But that may not be true, especially now. Companies tell shareholders that the millions of dollars spent on anti-union consultants, anti-union training, and even store closures ultimately save them money. It’s called union-busting, and those are just the highest-profile recent examples.
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