8 Million People Unemployed And There’s A Labor Shortage?
What’s Really Going On?

closeouts sell excess inventory

It's hard to understand what is really happening in the labor market for closeout wholesalers, warehouse workers and surplus merchandise distributors. There is a massive restructuring underway in the economy that’s triggering unprecedented change for both the employer and employee. Workers are changing where and how they want to work. Salespeople who sell excess inventory and deal in closeouts are doing business differently than before. The pandemic and all of the anxieties, lockdowns and time at home have changed people. Some want to work remotely forever. Others don't want to travel anymore so they can spend more time at home with their families. And others want a more flexible or more meaningful career path. Meanwhile, companies are beefing up automation and redoing entire supply chains and office setups.

Resignations are the highest on record -- up 13 percent over pre-pandemic levels. There are nearly 5 million more people out of work than before the pandemic. There’s a surge in retirement with more than 3 million people leaving the workforce during the pandemic. And there’s been a boost in entrepreneurship that has caused the biggest jump in years in new business applications. Closeout wholesalers cannot unload trucks because there aren't enough warehouse workers; it is especially challenging to on board new hires when fast food chains are paying $18 and $20 per hour with $1,000 sign on bonuses. Surplus merchandise is often sold to closeout buyers at a discount so it can be re-sold into a secondary, deep discount market. These closeouts often go to dollar stores, variety stores, closeout websites, etc. When companies sell excess inventory, they do so with the purpose of getting rid of it at a low price. Closeout wholesalers move this inventory in volume at low margins, so labor costs must be kept down in order to survive.

Some of the largest closeout retailers include Target, Walmart, Big Lots, Ollies, and Dollar Tree. These big box stores all specialize in importing inexpensive stock lots and closeouts so they can offer the consumer amazing deals on great merchandise. Closeouts are particularly popular among young families and older consumers who are on limited budgets. But surplus merchandise can appeal to all age groups as long as the products are in demand and discounted below regular cost.

In the early days, Ben Franklin Five and Dime stores were the original discount stores. Companies are often forced to sell excess inventory at steep discounts for a variety of reasons. Sometimes the business is having financial difficulties and needs cash; sometimes a company will need to make space in the warehouse for new goods arriving; others change and discontinue merchandise creating a need to sell old inventory. Whatever the need, these goods are sold at a discount which is always passed along to the consumer.

While companies say they are struggling to find workers, many unemployed say they are having trouble getting hired, especially if they haven’t worked for a year or more. There seems to be a disconnect between what job seekers are looking for and what employers are asking for. Someone who used to make $24 per hour pre-pandemic can't take a warehouse job making $12. Likewise, the job that requires on premises work can't be done from home, no matter how much the employee doesn't want to come in.

The pandemic is a shock both to labor demand and to labor supply. There are many people who have pulled back and are deciding to wait out this year and come back to work when the conditions are right. For closeout wholesalers and surplus merchandise buyers this may mean it can be a while before we see some sense of normalcy.