Tuesday, May 10, 2011

The Effects of Rising Gas Prices


Currently, Americans are struggling while paying more than $4.00 per gallon, yet Exxon Mobile just announced a 69% boost in earnings.  We don’t get it either.  We do know that rising gas prices threaten our recovery from the recession and our ability to put Americans back to work.

Here’s a to-the-point, albeit obvious, breakdown of how rising gas prices and resulting inflation affect workers, companies, and staffing agencies.

WORKERS

Here’s a quote from a contractor that sums up some problems many in the workforce, particularly contractors, are facing.

As an independent contractor who frequently travels to different customer locations, rising gas prices have definitely affected how I do business. Where I used to take clients within a one hour driving distance, I now only drive within a 20 mile radius. I generally only work a few hours at a time and often after I have paid for gas and childcare it is just not worth it. I have had to find ways to make extra money from home and eventually I may stop my job that involves commuting. It is hard to believe that in January of 2001, just ten years ago, that the average US gas price was only $1.37 a gallon.

Workers are not only paying more for groceries and every other item whose cost goes up with gas prices; their commute to work now costs more, which is essentially like a paycut.  Workers may invest in more fuel efficient cars, carpool, switch jobs to work closer to home, or demand more pay from their current employers.

COMPANIES

Companies, too, pay more for parts and materials, production, and transportation. They must make up for the extra costs in some way, whether they become more efficient, cut back, or pass the costs on to their customers.

STAFFING AGENCIES

Staffing agencies, like any other company, feel the effects of rising fuel costs – from sales’ transportation costs as they visit new clients, to workers demanding (understandably) higher pay from our clients.

Staffing companies will play an important role in helping to bridge gaps and minimize the negative effects of high fuel prices.  For example, by streamlining placement processes so that workers are easily placed with companies close to them, we can minimize their cost to commute, and help offset the fact that clients aren’t keen on paying more for services when their own budgets may be pinched.

Bottom line is, rising fuel costs affect everyone, but companies who think strategically and plan for the worst case scenario will fare better than the competition.

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