Full Employment = Labor Challenges in Food Production Industry
Views on full employment and the health of an economy differ but typically focus on the same underlying variables. In the United States, full employment is categorized as an economy with an unemployment rate falling below 5%.
The June unemployment rate of 3.7% remains one of the lowest in the last 50 years and consensus among experts is that the economy is in a state of full employment.
These strong employment numbers have created challenges for recruiting and retaining labor in the food processing industry.
Below are some of the challenges the pork and poultry industry are facing:
- Employee turnover at slaughtering facilities has doubled in the past two years, peaking at 220,000 workers this past February.
- Many new and existing processing plants are clustered together in the same geographic region resulting in job loyalty and new employee relocation difficulties.
- Unfriendly immigration policies and growing competition from the construction, oil and landscaping industries raise serious concerns for the meat processing sector, which has become increasingly reliant on a large immigrant labor pool over the past three decades.
- An incremental increase of capacity of 10 percent in the chicken industry is expected, which is fueled by nine new plants coming on-line in the next two years.
- About 58% of workers quit their job within 90 days, another 28% quit between 90 days and 180 days, and only 14% stay longer than 180 days.
- Absenteeism and high turnover are estimated to add 4% to processing costs.
So, what does this mean?
With labor accounting for 60 to 70 percent of a plant’s expense, companies will need to find creative ways to address some of the challenges.
Some options include:
- Focus and improvements in operation efficiency
- Technology and automation options
- Wage increases
- Training and onboarding improvements
- Benefits packages
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