Worker shortage crippling supply chains, small businesses

CSX, one of the nation’s largest rail freight haulers, is turning away freight from customers and ceding this cargo business to truckers because the railroad is having trouble filling out its workforce.

CSX CEO Jim Foote told a conference sponsored this month by AllianceBernstein Holdings that CSX needs to add 300 workers—in jobs that pay an average of $130,000 a year including benefits—to its current workforce of 6,700 in order to work at full capacity, Bloomberg reported.

According to Foote, the annual attrition rate in the industry has jumped to 10% from 7%. CSX hired 1,000 train workers last year, but it wasn’t enough of an influx to keep pace with the attrition rate, Foote said.

The CSX chief exec admitted he was surprised the railroad was not able to quickly rehire workers that were laid off during lockdowns in 2020.

In hearings held in April by the national Surface Transportation Board, railroad workers testified that cost-cutting by the railroads and work rules that give them few full days off have been driving people away from rail jobs.

Labor shortages now are impacting the operations of numerous sectors across the US economy.

According to data released this month by the National Federation of Independent Business, a record 51% of US small business owners last month said they had open positions they couldn’t fill. This represents a 4% increase from April and matches the record set in September.

Almost half of the small-business owners confirmed they have raised the compensation they’re offering while seeking new workers.

“The labor force participation rate is slowly rising, but small businesses continue to have a hard time filling their open positions,” Bill Dunkelberg, NFIB chief economist, said in a statement.

“The number of job openings continues to exceed the number of unemployed workers, which has produced a tight labor market and added pressure on wage levels,” Dunkelberg said.

According to NFIB’s data, a quarter of small firms said they plan to raise worker pay in the next three months, a decline from the record of 32% in Q4 2021 but still historically a high level.

About two-thirds of small business owners reported hiring or trying to hire workers in May, up 8% from April, but of those respondents, 92% reported few or no qualified applicants for the positions they were trying to fill.

A report last month issued by an economic research team at the Federal Reserve Bank of Kansas City estimated that about 2 million workers are “missing” from the US workforce, compared to pre-pandemic participation rates, despite strong demand in the labor market.

The share of the US population that is working or actively looking for a job—known as the “participation rate”—was 62.2% in April, one percentage point below pre-pandemic levels, GlobeSt.com reported. 

The KC Fed report said the actual US labor force is an estimated 3.6 million smaller than it was before the pandemic, but only about 1.6 million of the shortfall can be attributed to demographics including an aging population and declining populations levels, leaving about 2 million workers in the “missing” category.