What the Toys R Us meltdown reminds us about workforce trends

By now you probably have seen the sad news that Toys R Us is in bankruptcy, and is facing the likely closure of its 700+ stores in the US in the coming months.

Definitely a sad day for many, especially for the thousands of Toys R Us employees soon to be out of work, and for the let's say 'traditionalists' among us who still enjoyed shopping for toys and games and the like in the 'real world', and not just from an Amazon app.

Of the many reasons that have been blamed for Toys R Us demise, competition from Amazon (and others) is frequently cited, along with the pretty staggering amounts of corporate debt and debt service payments that Toys R Us has been burdened with since its acquisition by Private Equity companies in 2005. Other post-bankruptcy analyses have pointed to Toys R Us failure to modernize its shopping experiences, inability to grasp digital commerce trends, and the fact that they lost touch with their most important customer - mothers shopping for their kids.

But there is one other factor that has contributed to the toy retailer's plight, one that has not been mentioned as much in the coverage, and one that has much wider implications in work and workplaces as well. And it is this: people in the US are having fewer children, thus creating fewer of Toys R Us' prime 'end customers', and, eventually, fewer entry-level workers for all US firms to recruit.

Here it the thing, the folks running Toys R Us maybe couldn't figure out what to do about this trend, but they did see it coming. Here is an excerpt from their most recent 10-K financial filing from April 2017:

"Most of our end-customers are newborns and children and, as a result, our revenues are dependent on the birth rates in countries where we operate," the filing reads. "In recent years, many countries' birth rates have dropped or stagnated as their population ages, and education and income levels increase. A continued and significant decline in the number of newborns and children in these countries could have a material adverse effect on our operating results."

Data from the CDC in the US backs that up - the most recent data available from 2016shows the US birth rate hitting a record low, and with no obvious sign of this trend changing, retailers like Toys R Us are going to face continuing pressure. Longer term, if this trend does continue, all kinds of employers will face pressure too - a different kind of pressure perhaps, this one stemming from relatively fewer entry-level or younger candidates, as well as the need to create workplaces that are more open, accommodating, and available to older workers too.

Since I love charts, I will close with this one, from our pals at FRED - a look at the increase in the 65+ labor force in the US over the last 20 years or so.

I will spare you trying to squint at the small print, but the total number of workers aged 65+ has more than doubled since 2000 - with almost 10M people in that group as of the latest data. And even if you can't read the small print, it is easy to see the 'up and to the right' trend in the data.

Fewer babies and young kids means trouble for Toys R Us in 2018. It could mean recruiting problems for your organization too, in a few years. Don't wait until it is too late, like our pals at Toys R Us, to know how to react.

Have a great week!

Don't talk to me, don't even look at me - I'm busy over here

Slapping on a pair of headphones or earbuds while you are work, especially in open plan offices, in order to help yourself to focus on your work, and probably more importantly, to send a 'do not bug me right now' signal to your co-workers has been a pretty common element of work for some time now.

But what do you do when simply putting on headphones is not enough of a barrier between you and pesky co-workers, their questions, their comings and goings, and other kinds of interruptions or distractions? You could simply accede to your true nature and quit your job and take up permanent hermit status? But let's say you don't want to go that extreme, and simply want to find a way to have a little bit more privacy, focus, and send an even more aggressive 'do not bother me' message to the office?

Enter the 'FocusCap' which has been described as a kind of 'horse blinder for people'. The idea of the Focus Cap is create a 'moble, distraction-proof fortress' so that a worker can 'fully concentrate on high demanding cognitive tasks'. That sounds pretty good to me. I may even need one of those here at HR Happy Hour HQ.

Check out the videobelow, (email and RSS subscribers will need to click through).

Pretty wild, right?

Are office distractions, and the challenges that are presented by the lack of personal space and lack of privacy that modern, open plan offices generate really driving workers to try and build little personal cocoons to carve out some space and peace among the chaos? Maybe so. I have not worked in an open plan setting for quite some time, but I am pretty sure I would not enjoy it all that much. Maybe with a pair of headphones on and a pair of these horse blinders for people I could make it seem like I was in my own spacious (and private) office, or sitting on the sofa in my PJs. 

And for the record, I have no relationship at all with the makers of the FocusCap. But I do think it is cool.

Have a great week!

UPDATE: On striking for a 28-hour work week

A few seeks ago I shared the story of the largest metal and steel worker's union in Germany whose members were threatening to strike for the right (among other things) for the ability to reduce their work week to 28 hours per week for up to two years at a time - mainly in times where a worker has increased child or elder care responsibilities. As a reminder, this is what the steel workers were trying to accomplish:

Workers have downed tools at more than 80 companies across Germany as the country’s biggest union stepped up its campaign for a 28-hour working week to allow employees to improve their work-life balance.

In what is shaping up to be the biggest industrial dispute in the metalwork sector in three decades, more than 15,000 employees took part in warning strikes at factories including those of the carmaker Porsche.

The IG Metall union, which represents around 3.9 million workers, wants every employee in the metal and electrical sector to have the option to reduce their working hours for a total period of two years, with the automatic right to return to full-time employment afterwards.

In mid-January I offered the take that we shouldn't look at these worker's demands as another example of the 'soft' or laissez-faire approach to work that we in the US like to think is common in Europe, and let ourselves believe that these kinds of increased worker calls for more benefits (including fewer hours potentially), could not become an issue here eventually. Workers in all kinds of industries likely have more power than they are currently exercising.

Fast forward about three weeks - how did it turn out in Germany?

UPDATE - German metal workers union secures right to 28-hour work week.

From the piece in Business Insider:

A German industrial union has won its workers the right to work just 28 hours per week in a deal that could eventually impact almost 4 million people in the country.

IG Metall, the biggest trade union in Germany for metal and engineering workers struck the deal which will allow staff to go down from 35 hours to 28 hours per week for as long as two years, in instances where they need to care for children, elderly, or sick relatives.

The agreement between the union and industry impacts some major, global manufacturers like Porsche, Airbus, and Mercedes, and also includes a 4.3% pay rise for the workers. It is a pretty major win for the workers, who seem to have gotten just about everything they were looking for in the deal.

Why does this matter, especially to US readers, in a time where unions and labor rights movements in general have been declining for ages?

I would say to think about this deal, and why the workers were looking for it, as less of a 'union' issue and more of a work/life issue. One of the major benefits of the so-called 'gig' economy is the schedule control that most gig workers have. There is a tremendous amount of flexibility and even power that comes with being able to self-determine how many hours you will or can work in a given day or week or month. Some times you want/need to work more, and other times fewer hours. Especially when dealing with child, elder, or other personal responsibilities.

This effort by the metal workers union is really an attempt to try and marry some of the best features of the 'regular' employee (steady pay, benefits, some level of security, commitment to one company), with the 'gig' worker economy, (flexibility, work/life balance, control and freedom).

Gig working is not for everyone. It can be uncertain, scary, can have pretty major fluctuations in compensation and benefits. And 'regular' work also has its downsides - lack of schedule control, long hours, stress about work/life. So what the German metal workers are really trying to do is find a kind of compromise between the two - by crafting a design where they are still 'regular' employees, but have more flexibility to determine when they need to reduce (or increase) their working hours based on personal and family circumstances.

That is the way to think about this story if you are a business or HR leader in the US or anywhere really - this is not about the union or some kind of Euro-socialist approach to work.

It is about workers trying to find the 'right' kind of work/life balance and arrangement that fits for them in the modern world. And it is about companies trying to find ways to ensure their goals can also be met, knowing that for most of them, these goals can only be met through the success and well-being of their workforces.

Have a great day!

UPDATE: Amazon just told you the top 20 cities for business investment in North America

Surely you heard about Amazon's announcement of their intentions to build a second company headquarters, the so-called HQ2, in the coming years, and the widely covered RFP process to help them identify candidates (cities and regions), for this new HQ2. I wrote about the process last October here.

Over 238 cities submitted bids to become the home of HQ2, and this week, Amazon named a short list of 20 cities that have made it to the second round of consideration, where Amazon will work more closely with these cities to dive deeper into the proposals, to get additional information, and to winnow down the list to the eventual winner - the home of the new HQ2.

This is a big deal for these 20 contenders - $5B in investments and as many as 50,000 high-paying jobs.

Here's the list of cities that made the short list, as well as a map showing the 20 - more on that in a bit.

Atlanta, GA

Austin, TX 

Boston, MA 

Chicago, IL 

Columbus, OH 

Dallas, TX 

Denver, CO 

Indianapolis, IN 

Los Angeles, CA 

Miami, FL 

Montgomery County, MD 

Nashville, TN 

Newark, NJ 

New York City, NY 

Northern Virginia, VA

Philadelphia, PA 

Pittsburgh, PA 

Raleigh, NC 

Toronto, ON 

Washington DC 

 

Kind of the 'usual suspects' list I suppose, but a couple of things stand out for me.

One, nothing in the NorCal/Silicon Valley area. Probably a couple of reasons for this. Amazon has always seemed to indicate that it wanted more of a geographical balance between its current Seattle HQ and the eventual HQ2, pointing to a midwest or eastern location as a more likely selection. And two, I wonder if Amazon just wants no part of the already overheated market for talent, real estate, and inflated cost of living that comes with the Valley.

Also, from the long list of 238, which certainly included a lot of places that had no real chance at meeting Amazon's requirements for population, talent availability, access to transportation hubs, etc., the final 20 does not include even one true 'outlier', a real longshot location that would have at least made things interesting, (if you are a betting person, anyway). Pretty much any of the 20 on the short list would seem reasonable should they eventually win the bid and become the home of HQ2.

Finally, in case you or your leadership were wondering just what were the best locations in North America to consider a similar, major investment, well, Amazon might have done the first wave of analysis and due diligence for you. You can almost look at the Top 20 list from Amazon as a starting point and work from there. And believe me, even the 19 cities that don't win this bid will remind you and everyone that they were a finalist for one of the largest US corporate investment initiatives ever.

And since everything is more fun when there is something on the line, I present Steve's opening odds for each of the 20 finalists to be named the home of the new HQ2.

Atlanta, GA - 4/1

Austin, TX - 5/1

Boston, MA - 7/1

Chicago, IL - 8/1

Columbus, OH - 25/1

Dallas, TX - 10/1

Denver, CO - 12/1

Indianapolis, IN - 20/1

Los Angeles, CA - 15/1

Miami, FL - 15/1

Montgomery County, MD - 20/1

Nashville, TN - 25/1

Newark, NJ - 20/1

New York City, NY - 10/1

Northern Virginia, VA - 15/1

Philadelphia, PA - 12/1

Pittsburgh, PA - 12/1

Raleigh, NC - 10/1

Toronto, ON - 20/1

Washington DC - 15/1

Reminder: These odds are presented for entertainment purposes only, please, no wagering.

Have a great day!

Striking for a 28-hour work week: What happens when workers feel like they have the upper hand

Over the weekend while taking a break from freezing and shoveling snow, I caught this recent piece from the Guardian - German workers strike for the right to two-year, 28-hour working week'.

Turns out in Germany the combination of the traditionally strong position of workers and worker's groups, historically low unemployment, and a robust and growing German economy have conspired to put industrial workers, in this case the Metal Workers Union, in a place where they can hold 'warning' strikes against employers as they advocate for a new benefit - the ability to reduce their hours to 28 per week for a period of up to two years. More details from the piece in the Guardian:

Workers have downed tools at more than 80 companies across Germany as the country’s biggest union stepped up its campaign for a 28-hour working week to allow employees to improve their work-life balance.

In what is shaping up to be the biggest industrial dispute in the metalwork sector in three decades, more than 15,000 employees took part in warning strikes at factories including those of the carmaker Porsche.

The IG Metall union, which represents around 3.9 million workers, wants every employee in the metal and electrical sector to have the option to reduce their working hours for a total period of two years, with the automatic right to return to full-time employment afterwards.

Later in the piece we learn that this reduced working week proposal is centered around the need for improved work-life balance for workers, particularly in times when they have more elder or child care responsibilities. Certainly anyone who has dealt with or is currently dealing with the constant struggle to balance family and personal care needs with work would appreciate the benefit for which the German workers are advocating.

Before you pass off this as another 'Coddled European workplace' story and dismiss its importance or relevance for most of the rest of us, think about this.

The conditions here in the US are not all that different than what is happening in Germany, and in many other developed countries right now. Unemployment is at or near decades-long lows. Skilled workers are incredibly hard to find (and to retain). In manufacturing and other heavy industries, long tenured and older workers are retiring much faster than they can be replaced with new talent. And finally, more and more American workers are also struggling with elder and child care needs, and making the balance with work and these personal obligations work. In fact, we did an entire recent HR Happy Hour Show on this topic.

The main difference, you would rightly point out, in the story in Germany and the labor relations environment here in the US is the US worker generally does not have strong union/labor council representation that can advocate for these kinds of benefits and policies. And that is a big caveat, I admit.

But all the other conditions are present, if not more acute here in the US. In fact, the US unemployment rate is about 4.1%, much lower than in Germany right now.

So the thing to think about might not be 'What will I do when the workers agitate for 28-hour weeks?', but rather, 'Am I / we prepared for a labor environment where we (the employer), have even less power and influence than we have today?'

And, 'Are we prepared for a world where we don't choose employees, but rather one where employees choose us?'

Have a great week!