Unemployment rate sparks hiring concerns

Workers at Walmart and
other retailers are getting raises as unemployment
drops.
William Thomas Cain/Getty
Images

• The US unemployment rate fell to
  3.7%, a 48-year low, in September. 
• While low unemployment is a sign of a healthy economy, it is
  worrisome news for companies scrambling to hire and retain
  workers. The
  restaurant and
  retail industries are trying to fill hundreds of
  thousands of job openings. 
• Companies are giving workers higher pay and better benefits
  to compete — and trying to figure out how to cut labor hours by
  replacing employees with robots. 

Fast-food chains and
retailers alike are fighting an increasingly intense battle
for employees. 

The US unemployment rate fell to
3.7%, a 48-year low, in September. According to the
monthly jobs report released by the Bureau of Labor Statistics on
Friday, the last time unemployment was so low was December
1969. 

While low unemployment is a sign of a healthy economy, it is
worrisome news for companies scrambling to hire workers. 

There were 757,000 retail-job openings across the United States
in July, which is about 100,000 more than a year ago, according
to the Bureau of Labor
Statistics. The food industry had 909,000 job openings
in July, an increase of 161,000 from a year ago. 

“You’ve got an environment where, really, the economy is strong,”
BTIG analyst Peter Saleh
recently told Business Insider. “People are trading up into
better jobs. There aren’t as many employees or capable employees
to do the jobs these companies need.”

Restaurant and retail executives are
getting anxious about filling the necessary positions.

“For some brands, it’s actually capping their sales potential,”
said John Hamburger, the founder of industry trade publication
Franchise Times Corp.

“If you can’t find enough people to fill a shift, you just can’t
possibly do the potential volume of what some of these
restaurants are supposed to be doing,” Hamburger continued.
“There’s a lot of brands that are having a lot of trouble trying
to find workers.”

Workers are getting raises — or being replaced by robots

A
McDonald’s employee passes an order to a driver at a
drive-through restaurant in Los Angeles.
Lucy Nicholson/Reuters

As a result, workers are seeing increased wages and new
benefits. 

On Tuesday,
Amazon announced plans to raise the company’s minimum
wage in the US to $15 per hour.
Walmart, Target, and Costco also increased starting worker
pay earlier in 2018. 

In an attempt to hire seasonal workers for the holidays,
retailers are also pushing new perks. 

JCPenney is offering workers paid time off and even making some
eligible for 401(k) benefits. Kohl’s announced that seasonal
workers will receive an “unprecedented” 35% discount during
certain shopping periods. Walmart
even reportedly sent
out a survey to employees, asking them which benefits would be
most “meaningful to new hires.”

While some fast-food chains are also increasing pay to
compete, the restaurant industry is increasingly relying on
automation to cut labor costs. 

Shake Shack, Taco Bell, and McDonald’s are
all rolling out ordering kiosks across the country. Arby’s has
installed ovens that automatically roast beef, while Dunkin’
Donuts has roasters that independently grind
coffee, the
Wall Street Journal reports. And, mobile
ordering has become the norm across the industry, with chains
from Chick-fil-A to Starbucks incentivizing customers to download
the apps.

“The only way to truly deal with this is to reduce the number of
labor hours that are required to run your concept,” Saleh said.
“And, I feel like the only way to really do that is to implement
technology.”