This has always happened. What’s different now is that we are willing to hire back the person who just left six months ago, AND we are willing to give them that $10k bump we refused to give them when they were leaving.
I’m sure that has happened, but consolidation tends to reduce the number of jobs out there, as redundant positions created by the merger get eliminated. In your example, if ten doctors have ten offices, they need ten receptionists to book appointments and the like. If they’re all consolidated into one office, though, it’s likely they can get by with fewer receptionists, each doing a few more bookings, so probably 1-5 receptionist jobs disappear.
But we know that those losses have now largely been offset by new jobs.
Plus, there are a lot of obvious stores and restaurants that have permanently closed in the last two years. I’ve been looking at real estate lately, and part of that is checking out the neighborhoods on Google Maps. Almost everywhere has some businesses that are still on the map as navigation points, but which are marked as “Permanently closed”. These are usually smaller local businesses, which are not good candidates for consolidation. They just disappear, and maybe something entirely new shows up in their place.
But even that has to have a positive effect, eventually. How much “Screw this job, I’m leaving!” turnover will companies take before they finally accept that they need to pay more, and suck less? Constantly recruiting and training new people, only to have them leave within a year, has to be a major disruption to their business.
It doesn’t matter to those who always see the grass as greener on the other side.
Seems a growing trend is for people to work for a week or two, get their first paycheck, and quit. They make enough at the current elevated wages to get by for a couple months, and they know that there will be another job for them when they run out of money. Employers get no value, in fact, often lose out, not only paying them for being trained, but another employee to do the training. But even though the employee never generated a dime of value to the employer, they still get paid.
The more an employer pays, the more likely they are to be used by such individuals.
John Oliver discussed the trucking industry recently, and noted that most companies have turnover rates for drivers in excess of 100% with some a high as 300%. And this a problem that pre-dates the pandemic, some of my professional contacts are recruiters for major trucking companies, and even in 2018-2019, one of them had turnover rates in excess of 130%. Not that I’m an expert on the trucking industry, but just out of morbid curiosity I’ve done a little research into it over the years and found much of the same information Oliver speaks about on his show.
Driving a truck used to be a pretty good job back in the 70s and a good chunk of the 80s. I don’t mean to imply that it was easy, but it paid well enough for workers, many of whom were not well educated, to provide a decent life for their families. But it’s such a crummy job today that they can’t keep drivers. I’m with you in that I can’t believe some of these trucking companies haven’t accepted that this turnover increases the cost of doing business. Hell, Henry Ford realized that back when he was making Model Ts. When I hear a transportation company complain about the difficulties they have finding drivers I just can’t help but think of the unmitigated gall of such complaints.
I’d assume that there is at least some inertia built into the industry.
If I want something shipped, I don’t really care all that much about how much they pay their drivers or their benefits, all I care about is the cost and how long it takes to get there. If someone else can offer something cheaper, I’ll take that. If a company raises its shipping rates to pay their drivers better, then they won’t get any business.
But does it? I watched the same John Oliver last week, and as he pointed out, people pay to lease their trucks from the company, and if they aren’t in the ~5% that end up paying it off and owning it, then the company gets the truck back, and the payments towards it. Training is done on the trucker’s own time and dime. Most industries require at least some investment into the employee in order to make them useful, trucking, not so much. For the companies described in the segment, so long as they can maintain a steady stream of suckers looking to “be their own boss” and all the other crap they threw in that promotional video, they probably make money off of having that high a turnover rate.
It doesn’t help that the industry is dominated by seniority either. If you’ve been with a shipping company for a while, either as an employee or a contractor, then you are going to be getting the more profitable routes, leaving the more marginal routes to the newbies.
I’m certainly not saying that these are good things, nor things that cannot be overcome, just saying that there is more than just unmitigated gall in why our supply chain is failing. There are a number of structural issues, as well as perverse incentives at play as well.
There used to be a trucker who posted on another message board I read, who detailed his experiences. And it was just insane. He spent nearly a decade moving from one company to another every year or two, since they’d all offer great employment packages to start, and then gradually make things worse and worse for him.
When you’re hearing about just one guy, you think, “Well, maybe it’s just him.” But then you hear the same stories from other places, and you realize it’s the whole industry. I don’t know what motivates them to be so shitty (okay, sure, it’s “profits”), but god damn, there are times you think a little societal collapse would be a small price to pay, if it actually makes them get their heads out of their asses, and realize that this business model simply isn’t sustainable.
They’ve gotten away with it for twenty years now, because of the lingering memories of truck driving having been a good job, but now it’s catching up to them. They’ve burned everyone who fell for their BS, and now, more people know what’s going on, so fewer people are falling for their BS.
My brother drives a truck. He gets paid $.55/mile, which sounds suspiciously familiar.
But that’s the thing - it didn’t use to be that way. At some point, someone decided to start using this leasing system, and then they (or someone else) realized that this system could be used to systematically abuse the drivers in order to drive up profits.
And then they went and did it, because profit was the only thing they cared about.
We really lost the plot on capitalism, somewhere along the line.
Eh, it’s not the whole industry. My understanding, (and this is from about 8 years ago and is based on anecdotes from friends I had in the industry at the time) is that if you work for a company that ships its own products or delivers to its own properties, you were often well compensated and treated.
The problem is that a bunch of low cost shipping lines sprung up, competed for business with more established carriers, and ruined the market for freight shipping. When Old Dominion et al had a bit of an oligopoly going on, they could afford to pay their drivers well and pass that cost on to the customer. Now that there will almost always be someone willing to take a load for less than the last, it’s become a race to the bottom.
In this case, it’s less that companies can’t get their heads out of their asses, and more that the business model that’s not sustainable has been introduced by their competition.
There’s always going to be another sucker. And as long as there is, the low cost carriers have no reason to change, and as long as the low cost carriers are in the market, the old school carriers have to emulate their business model to not go bankrupt themselves.
You know, if the Ottawa truck protest had been about this, rather than about mask and vaccine requirements, I would have actually had sympathy for them.
While most of us are going about our daily lives we’re not really giving a lot of thought to the employees of companies who provide us with goods and services. I don’t really think about the employees when I’m purchasing a hamburger, getting my tires changed, or wasting my money on little toy soldiers to paint and I’m barely cognizant of the supply chain. But sometimes I do think about it. I’m willing to pay a little extra for that hamburger if it means employees are paid a little better.
Not all companies do this. But this is another example of why many people consider trucking to be a crummy occupation these days. Trucking companies say their drivers are independent contractors, but the company dictates their schedule and how they work which is the hallmark of an employee not a contractor.
The unmitigated gall comes from bitching that nobody wants to work while ignoring their own history of treating their workers like shit.
Same here, and that was one of the most frustrating parts of that nonsense. There are so many legitimate problems right now, but they went and focused on stupid made-up bullshit.
Don’t kid yourself, capitalism has always been about profit first and foremost. Once the industrial revolution hit, it was pretty clear that big companies would grease their machines with human blood if they could get away with it.
Some do think about it, some don’t, most don’t, really. And those who do only think about it sometimes. Pay and treatment of workers has very little impact on customer loyalty.
And if I pay 10% more for a cheeseburger, then I am paying at most a dollar extra. When I have had things shipped via LTL truck, it costs many hundreds and sometimes thousands of dollars. 10% increase on that starts turning into real money pretty quickly. How much do I really care about the employment conditions to pay an extra couple hundred dollars to get a pallet of equipment delivered?
And that’s assuming I have a choice, 90% of the time when I have to order something that will come on a truck, the seller is the one who has chosen the carrier.
The independent contractor thing has been abused across a number of industries. In the case of a truck driver, it’s actually probably more justified than in most. If the company doesn’t actually assign loads and schedules, but instead offers loads to be hauled, I can see how it makes sense.
Still bullshit, especially since it means that you now have a bunch of “independent contractors” all competing to take loads, which is a situation that leads to a race to the bottom.
Someone is not, in my book, an independent contractor unless they are not only allowed to, but realistically can work for a number of different employers. Most of the truck drivers are more or less stuck hauling for a single company, which, (once again, IMHO, not by the DOL’s definition) makes them an employee, not a contractor.
You are assuming that there is a venn diagram composed of a single circle here. There are plenty of good employers who also cannot find workers.
What always makes me wonder is why aren’t there some companies that treat there employees better, so they have a more stable workforce, and can offer a better service.
- $800 to ship your pallets, but we don’t know when it will move or when it will get there, because we don’t have drivers
- $1200 to ship your pallets, but we can guarantee a slot on the truck leaving Tuesday and that it will arrive on Friday, and our well earned reputation means you can trust this
Right now we seem to have
- $800 to ship your pallets, but we don’t know when it will move or when it will get there, because we don’t have drivers
- $1200 to ship your pallets, but we don’t know when it will move or when it will get there, because we don’t have drivers, but we make more profit on the shipment
I agree, that there needs to be serious and well thought out reform of the independent contractor rules. If you drive for FedEx Ground, you own the truck, but you paint it the way FedEx tells you, you drive when and where FedEx tells you, and work at FedEx’s pleasure. That doesn’t sound independent. More that FedEx has outsourced truck maintenance and employee benefits to the employee.
An independent contractor should be able to use their truck however they want, with whatever shipper they want. Sure, working for FedEx today, put this magnetic sign on your truck and put on a FedEx shirt, tomorrow switch to an Amazon sign and shirt because they outbid FedEx for your services.
Doctors tend to keep their staff and offices. Even with those groups who do centralized scheduling, a receptionist is still needed if nothing else to handle the records and collect copays.
I’ve noticed a lot of COVID startups that went right out of business. Restaurants and small shops for example. It seems like more small time restaurants opened here in 2021 than any previous year, but like all of them have closed. I can think of ten restaurants just off the top of my head, that I’ve been to and that have opened this year! And the thing is, most of them are almost always empty. We’re always wondering how the restaurant manages to stay afloat with so little business. It’s a shame because some have good food (good, not great). New restaurants didn’t tend to last even before the pandemic but they were also very rare.
Google Maps is a little weird, because if you are looking from the map it will sometimes give the closed restaurant even though the new restaurant opened in the same spot, and would show up if you searched for it by name. In my experience other information can be out of date such as hours of operation, reviews, or even the business website. It is great for directions, though.
~Max
If it’s not time sensitive, then I go option 1. Most others do as well.
As I don’t see a difference in the service, I go option 1, which means that company 2 can’t pay their drivers any more than company 1 can.
I really don’t see this as something that is going to be solved without some sort of govt regulation. Any company that tries to do the “right thing” will be undercut and driven out of business. The vast majority of people will never make a choice on a trucking company, and those who do are going to be very price sensitive.
If the govt mandated a few things, like paying per hour rather than per mile including pay for “detention” time, not allowing such loose classification as “contractor”, and maybe a few other things I’m not thinking of off the top of my head, then the companies that want to do the right thing will be able to, and the companies that want to abuse drivers for profit won’t.
What I don’t get in all these “Race to the Bottom” arguments is, where are the Option Three carriers? 3. “$750 to deliver your palates, because although we abuse our employees just like everyone else, we’re also willing to cut our own profits so we can screw our competitors, too.”
Nope, it always seem to be that any suggestion to cut prices by cutting profits is met with horrified gasps, no matter how allegedly “competitive” the market is.
Wait, what? I don’t understand “cutting profits”? I know what each of those words means, but not when they’re used together.
Either that, or there’s an illegal cartel. Sometimes it’s even an unspoken cartel. Everybody knows not to go below $800.
Most companies in any industry that is not protected and subsidized (like oil) don’t have all that great a profit margin. Typically 5% is a standard. If it’s much higher, you get more entries in the market, lower, and people leave the market.
Trucking historically sits under 4% profit margin. It had a bit of a high point for a bit at around 6% a few years back, but that was short lived, and all indicator show that it’s well under 4% right now.
So, if they are getting 4% on a $800 load, then lowering it to $750 means they lost $18 on the deal. That’s not a sustainable business model either.
To be honest, that’s a pretty large variance.
In a real world example, I noted above my brother drives a truck for $.55/mile. He was telling me about one load, $250,000 (retail cost) worth of diapers being taken to a distribution warehouse or something.
He drove 800 miles. 3 days, after all said and done. 800 x $.55= $440.
Not being an expert in the trucking industry, I looked for shipping rates and came across this article:
I’m gonna simply take the lowest rate I can find… $2.80/mile.
800 x $2.80 = $2,240
My brothers pay: $440
Net: $1,800
Note, however, that my brothers pay, surely coincidentally by chance, is roughly equal to the mileage tax deduction for that trip (.58/mile) So the only expense born by the trucking company is gasoline and Repairs & Maintenance, and even .03/mile of that is written off.
Let’s see what happens if we pay my brother $100k/year ($312/day, assuming 6 days worked per week):
$2,240
- $936
= $1,304
The shipping company gets $1,304 before the deduction, a loss of around $500. But you know what? Let’s not worry about the trucking company. I’m interested in what this would cost the consumer.
Let’s say the trucking company wants to fullty pass the cost on to the diaper shipper, who then passes it on, and etc until it hits the shelves, the consumer paying the increased price for my brothers princely wage.
How much did the diapers rise in price because we paid my brother $100k, adding $496 to the shipping cost?
Cost of shipping went from $2,240 to 2,736. For a quarter million in diapers, shipping currently adds .0089 per dollar of diaper expense. If we paid Jim 100k, shipping would be .0109 per dollar of diaper expense. So for a $20 package of diapers, the consumer expense for paying my brother $100k/yr increases from seventeen cents at current levels to… 21.8 cents.
Five more cents for a package of diapers and you can pay my brother $100k/year.