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Where there’s smoke, there’s fire

Recently, I saw some interesting figures in the news.

The story was about convenience stores and fast-food chains, and the current practice used by many of them of hiring primarily part-time workers.

The assumption is that companies don’t have to provide part-time workers benefits or other full-time perks, so the companies should make more money using them.

Well, you know what they say about assuming. I won’t repeat it here. But this is a clear-cut case of that principle.

A writer for The Wall Street Journal took an in-depth look at the situation and the statistics, and found something interesting. A few chains that instead are hiring more full-time workers – providing them with stability, better pay and benefits – are seeing significantly lower turnover AND higher profits.

That last part is what we call the money shot. After all, why do businesses exist? In this day and age, it’s to make profit.

One convenience store chain saved nearly a million dollars just by cutting back on recruiting and training. That’s a bundle.

The writer went on to look at a restaurant chain that showed that with more full-timers, sales were 6 percent higher per hour, and absenteeism is lower.

Then we have trucking.

I remember years ago, before the economic downturn, reading that large carriers were celebrating because the truckload turnover rate was down to 116 percent.

Yes, those words were “down to.” As in, it used to be higher.

The ATA reported a short while back that turnover in the truckload sector is back to 100 percent.

Let’s compare that with some other types of businesses, shall we?

Compensation Force – a website that covers employee performance and compensation issues – quoted a 2014 CompData survey about turnover.

Overall turnover in all industries runs about 15.7 percent. Among the highest figures is in the hospitality industry, which includes lodging, theme parks, cruise lines, tourism and the like. That runs 27.6 percent.

Our friends at The Wall Street Journal, quoting an analysis from the Korn Ferry Hay Group, say that turnover among part-time workers in the retail sector (including those convenience stores) runs 68.7 percent.

Turnover among full-timers at those same retail outfits is less than half that, about 27 percent, and customers spend more when the full-timers are working.

So let’s review. Part-time convenience store workers – people with terrible pay, no benefits, little to no security, who are on their feet all day listening to customer complaints, who likely have to hold down a second job and who have a better than average chance of being robbed (just watch local TV news; you’ll see that I’m right) have a turnover rate significantly smaller (in fact, over 30 percent less) than the entire truckload sector of the trucking industry.

What’s more, if you just treat those convenience store workers with a touch of decency, even that turnover rate falls in half.

The reasons for the high turnover in trucking are many. We could point to economic deregulation, an over-competitive market, carriers making money off their drivers instead of by hauling freight, or any one of a number of reasons.

But the best explanation is the simplest: It’s all about the money.

The largest of trucking companies have made an assumption that they can simply put anyone behind the wheel, pay them crap wages, absorb the costs from safety problems into their budget, and make more money. They see paying and treating workers decently as a problem to be overcome, a barrier to higher profits.

Years ago, a trucking company (I won’t mention which one) tried an experiment in which they hired more experienced drivers and paid them better. Along with all the other benefits that trucking company received, such as improved safety scores, its profits increased as well.

However, their stock prices had a different reaction. Several Wall Street firms issued recommendations against buying that carrier’s stock. Their reason? Labor costs were up.

That the company’s profits were as well didn’t seem to matter.

They reversed course and went back to trucking business as usual.

And we wonder why trucking turnover is so high.

An old expression tells us that where there’s smoke, there’s fire. The sky-high turnover in the truckload sector is the smoke. Perhaps we should do something before the fire gets too hot.


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