It’s just the latest example of dire measures companies are being forced to take in response to a nationwide worker shortage that is plaguing the food industry. In addition to hiring workers from out of state and boarding them, businesses say they’re turning to middlemen to recruit them — a costly measure that’s also helping drive up prices for consumers, sources told The Post.
“Never in our wildest dreams did we imagine we’d be doing this — putting people up in hotels to work for us,” said Christopher Pappas, chief executive of Chefs’ Warehouse, a $1 billion Bronx-based food supplier for restaurants, hotels and other businesses.
Pappas said he was forced to start renting some of his workforce “from Alabama and other other states” when the economy starting bubbling up a few months ago.
The company had lost 40 percent of its drivers and warehouse workers during the pandemic, a period that led to some 88,300 US trucking jobs getting slashed last April, the industry’s single largest cutback ever, according to data from the Bureau of Labor Statistics.
Unable to fill the gaps, Pappas turned to Katonah, NY-based Regional Supplemental Services, which rents out truck drivers and other workers to large companies that need them.
It was a solution with a cost. Companies that lend out temps on an “emergency” basis charge a premium. That’s not to mention the cost of keeping the workers housed, Pappas said.
The food executive, who pays his own workers $20-plus an hour with benefits, declined to say what he pays for the contract workers. But he acknowledged, “We paid a lot, whatever we had to to service our customers.”
Chefs’ Warehouse is hardly alone as US companies struggle to meet rebounding demand amid a severe worker shortage, says Rich Jennings, vice president of trucker outsourcing company RSS.
“I get calls from desperate Fortune 500 companies every day that need to move perishable food,” Jennings said. “It’s most dire in the food industry right now.”
Business has been so brisk that the 30-year-old company posted its best year ever in 2020. And this year, revenues are on track to rise by 600 percent, Jennings said.
“I’ve never seen drivers get paid what they are paid today,” Jennings added. “They are getting well into the six figures and they can easily make $3,000 a week. A [commercial driver’s license] is like a golden ticket right now.”
Indeed, a search for commercial driver’s licenses on Craigslist pulls up numerous jobs offering $2,000 to $3,000 a week, plus signing bonuses. One recent eyepopping add for a full-time job in Illinois dangled a $15,000 sign-on bonus for a candidate with at least “six months of experience and a clean driving record.”
Some warehouse workers, such as those who are able to operate heavy machinery like forklifts, are also commanding six-figure pay, Jennings said. He declined to elaborate on how pay is determined or divvied up except to say that RSS gets a percentage of the agreed-upon wages.
The labor shortages are quickly translating into higher prices for consumers.
Average producer prices for truck transportation rose 10 percent in April from a year ago — the “strongest growth since just after the financial crisis when it briefly got into double digits,” according to Mark Zandi, chief economist at Moody’s Analytics.
These price increases are especially “meaningful” for food products, Zandi said, as transportation accounts for a larger percentage of overall costs for food than for most goods.
At Chefs’ Warehouse, charges to the company’s customers rose by an average of 7 percent in the first quarter on the 55,000 items it sells, the company reported in April. That’s more than double the typical increase of 2 percent to 3 percent, Pappas said.
The most wild price spikes include a 54 percent increase for 35-pound tubs of canola and soybean fry oil — a staple in commercial kitchens, according to Chefs’ Warehouse. Meat is up by roughly 20 percent while cases of kosher salt, chocolate and olive oil have spiked by 30 percent.
“Anything above 2 or 3 percent,” Pappas said, “is earth-shattering in this low-margin business.”
Amid the labor shortage, TransForce Group of Alexandria, Va., which runs truck-driving schools and rents out drivers, has seen record demand for its services, said Chief Executive Dennis Cooke. Even its newly minted and younger drivers — who are harder to place because of insurance liability issues — are finding jobs across the country, he said. About 70 percent of TransForce Group’s students are military vets.
Of course, drivers were in short supply even before the pandemic. And some of the shortage may simply be due to the grueling nature of the work, which can have drivers pulling shifts of 10 to 12 hours while unloading a backbreaking amount of freight.
In the food service industry alone, there is a shortfall of 15,000 drivers and 17,500 warehouse workers, which amounts to about a 12 percent vacancy rate per company, according to a recent survey by the International Foodservice Distributors Association.
A former driver for FreshDirect who asked not to be identified told The Post he lasted in the job for a year before he found a position as a janitor at Memorial Sloan Kettering hospital.
“It was my first time being a driver and most likely my last,” he said. “It’s physically very demanding work, lifting crates with gallons of water and cat litter.”
“These are hard jobs,” Pappas agreed. It’s one reason he assumes many of his former employees opted to draw on generous pandemic unemployment benefits, enhanced by weekly $300 checks from the government plus stimulus money – or that they left the industry for different jobs.
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