Will rising fuel costs lead to staffing freezes?

As the cost of fuel skyrockets, many organizations are feeling the pinch on the pocketbooks…with a dash of the Perfect Labor Storm for good measure. One story that caught my eye this morning was a news story from Illinois.

Several communities in the Chicago area are being criticized for their poor response to the massive snowstorm that hit much of the Midwest the last few days.  Part of the blame was placed on understaffing.  Will rising fuel costs lead to staffing and salary freezes in order to balance budgets?

While blaming government officials for not having adequate staffing in the event of an occassional weather related crisis (how can we forget Katrina?) is not news, the problem I believe extends much deeper.

This isn’t the first time they got flak. Apparently government officials received criticism for delays in leaf pick-ups as well as lack of road work in the past. Unlike the aftermath of massive snow fall, tornado, huuricane, or flood – not to mention a terrorist attack, leaf and trash picks and poor road conditions merely create inconveniences. Eighteen inch snowfalls bring life as we know it to a halt, even if only for a few days.

One cause of the problem is that while communities have increased in size, staffing levels of the agencies responsible to support the communities have not.  While that might be good for budgets, eventually lean and mean becomes scarce and ugly.

So what’s this have to do with the Perfect Labor Storm?  Well here are a few thoughts that went through my mind as I read this story: As the cost of gas diverts dollars from the organizational budget, how will this affect staffing levels? 

Will existing workers be asked to do more and more as organizations struggle to fill gas tanks?  What will this mean for the quantity and quality of services?  How long will agencies and departments that support our infrastructure be able to fill up fuel tanks but squeeze the people running the equipment, answering the phones, driving the vehicles because money is tight? 

More dollars for fuel will mean less dollars available for new positions and wage increases.  With many organizations, especially government, civil and military, faced with massive retirements in the next five years, how will they attract new workers and retain existing ones under these circumstances? 

Raising taxes is one option but we all know that is not the p.c. sort of thing to do. That leaves squeezing department budgets. When it comes to putting fuel in the gas tanks or hiring more people or paying higher wages – well we all know the answer to that one: people are our most important asset except when it requires an investment.

First to go during budget crunches is often training. Then comes the hiring freezes, followed by salary freezes.  That of course tends to lead to morale problems, turnover, poor customer service, lower productivitiy and the list goes on. This leads me right in the path of the Perfect Labor Storm.

The pattern is clear – every one of the following crises included a shortage of qualified people as a cause. It’s a well-know "secret" that our infrastructure is starting to crumble – recall the Minneapolis brige collapse last year? A lack of inspectors was cited as one reason it occurred.  The explosion in mid-town Manhattan when underground pipes failed?  Same excuse. Or what about the recent contaminated beef recall?  Not enough inspectors to handle the case load.

So when will it finally hit our leaders and executives that human capital, like fuel, is a limited resource.   That without people, the vehicles won’t move, the snow doesn’t get cleared, the leaves don’t get picked up, the potholes don’t get filled, the bridges don’t get inspected, the food doesn’t get inspected and so on and so on.  How many more crises need to occur before it sinks in that like fuel, qualified people are becoming scarce and the cost of skilled labor is increasing and a proactive approach will be presented?

What stories do you have to share about how the skilled shortages are affecting your community?


Ira S Wolfe


  1. Ira Wolfe March 12, 2008 at 9:40 pm -

    Excellent questions. Yes, some areas of the U.S. have high unemployment while others still operate at historical lows (well under 5%). I left a meeting today with over 125 senior level executives and owners from central PA. By a show of hands, over 90% of the audience said they have at least one critical position that they can’t fill – from sales to management to project mgt to technicians to health care…. The shortages are based on skills not availability. A lot of unemployed workers have just not kept up and if they have, they may not be willing to relocate to areas where jobs are available.
    As to why unemployment is increasing and the economy stuttering, I’ll leave that to the economists to figure out. My only comment is that the U.S. while still owning the largest economy in the world is no longer the ONLY major economy.

  2. HRagitator March 12, 2008 at 2:53 pm -

    I’m not denying that there are labor shortages in certain areas (tried to find qualified engineers in the US lately), but I have a question. If there is such a shortage, what are our workers doing? Are there excesses somewhere? Why is unemployment increasing and the economy stuttering?