Tag: employment

Amazon calls it “our biggest hiring event of the year.” Olin professor Panos Kouvelis calls it retailers’ worst nightmare.

It is Amazon Jobs Day when the e-commerce giant says it will hire 50,000 people for positions at 12 of its fulfillment centers on August 2. Job candidates will be given tours of the centers to “watch our jobs in action, and see the magic behind the Amazon smile,” according the company’s website.

Panos Kouvelis

Kouvelis, Director of The Boeing Center for Supply Chain Innovation and Emerson Distinguished Professor of Operations and Manufacturing Management at Olin Business School predicts Amazon’s hiring spree could have reverberations all the way to customers’ front doors.

What effect will adding 50,000 new workers in one day have on Amazon’s supply chain and distribution system?

For Amazon, the focus is on the customer, and “speed” of service is everything. Speed at the level Amazon imagines it (two days, next day, in two hours), heavily depends on fulfillment center capacities. With more employees, their system should have the potential to become more responsive, in other words, shortening the time between when a customer clicks on an order to delivery. This is the logistical capability other companies find difficult to match, and it will get even harder for them to respond as Amazon scales up its operations. Amazon is a nightmare of a competitor for many retailers, and with these 50,000 new hires in one day, it just got worse for them.

Will many of these fulfillment center jobs be replaced by robots and drones in the near future?

I have visited a massive Amazon fulfillment center outside Seattle. It is reasonably automated, but there is still a need for workers. For now, human labor is the “flexibility” element for Amazon. People are needed to handle the more complex operations such as final packaging. At fulfillment centers that function on a smaller scale and exist to provide proximity to certain markets, automation is inflexible and costly.  In those cases, human labor might be more flexible to adjust to demand conditions and more cost effective.

Amazon continues to invest in automation (robotics, three D printing, drones etc.), and has already replaced quite a lot of labor. Over time, Amazon will definitely move to higher degrees of automation.

Could Amazon turn abandoned shopping malls into distribution centers?

Distribution centers need a lot of space at low cost. If the empty shopping malls come at very low rental rates, why not?  Shopping malls near town centers might be expensive for storing a lot of inventory, but you could have temporary shipment consolidation or pickup locations close to cities in areas that used to be thriving shopping malls before the boom in online shopping drove bricks and mortar retailers out of business.

RESTON, Va., June 20, 2017 (GLOBE NEWSWIRE) — Corporate hiring plans for 2017 point to robust employment opportunities for graduates of MBA and business master’s programs, according to a new employer survey report from the Graduate Management Admission Council (GMAC). Globally, 86 percent of companies plan to hire recent MBA graduates this year, up from 79 percent that hired them in 2016. Demand for these MBA graduates is strongest in the United States and Asia-Pacific, where 9 in 10 companies plan to hire these candidates.

Karen Heise

“It’s indeed good news the market continues to value MBA talent,” said Karen Heise, Director of Olin’s Weston Career Center. “The expectations and requirements for MBA students to achieve their career goals means a lot of hard work, persistence and resilience. Olin’s MBA students invest significantly in their career search and succeed across a wide range of industries (consulting, financial services, technology, CPG, manufacturing and healthcare being the front-runners) and job functions including finance, general management, consulting, and marketing. The entrepreneurial spirit of our students serves them well in capitalizing on opportunities where MBA talent is valued.”

“Despite the political uncertainty about the status of immigration and work visas in the United States and other parts of the world, companies are keen to hire graduates from this year’s MBA and business master’s programs, including international candidates,” said Sangeet Chowfla, GMAC president and CEO. “This signifies the value these programs create for students and the vital role their skill sets bring employers.”

At the time GMAC conducted the Corporate Recruiters Survey in early 2017, respondents in Asia-Pacific, Europe, Latin America and the United States declared their companies are staying the course with plans to hire international graduate business candidates. Overall, 59 percent of the survey respondents plan to hire or are willing to hire MBA and business master’s graduates requiring legal documentation — a gain of seven percentage points from 2016.

Most U.S. companies (55 percent) either plan to hire (28 percent) or are open to hiring (27 percent) an international candidate in 2017 — up from 49 percent that had such plans last year. The technology industry in the U.S. is the most likely to hire international business graduates this year. Half of U.S. tech firms (50 percent) plan to hire such candidates in 2017 — up from 27 percent that planned to hire them last year.

GMAC conducted the 16th annual Corporate Recruiters Survey in February and March 2017 together with survey partners EFMD and MBA Career Services & Employer Alliance (MBA CSEA), in association with 97 participating graduate business schools. Survey findings are based on responses from 959 employers representing more than 628 companies in 51 countries worldwide. Two additional organizations, CEMS and RelishMBA, assisted with recruitment of survey participants.

Additional Key Findings
Hiring Demand Also Bright for Business Master’s Graduates
As the outlook for MBA hiring continues to look bright, so do projected hiring trends for 2017 business master’s graduates, especially those with Master in Management and Master of Accounting degrees.

•    The largest increase in hiring demand compared with 2016 is seen in the share of companies that plan to hire Master in Management graduates; globally, 59 percent plan to hire recent Master in Management graduates, up nine percentage points from last year.
•    Notably, 70 percent of manufacturing companies plan to hire Master in Management graduates in 2017, up from 50 percent of companies that hired them in 2016.
•    Data analytics expertise continues to be in high demand. Sixty-nine percent of employers plan to place recent graduate business school hires into data analytics roles in 2017, just trailing marketing, business development, and finance roles — each with 71 percent.

More Start-Up Companies Plan to Hire B-School Grads This Year
For the first time, this year’s survey report breaks out the responses specifically among start-up companies, revealing a promising 2017 hiring outlook for business school graduates. Three in 4 start-ups plan to hire recent MBA graduates in 2017, up from the 52 percent that hired them in 2016. More start-ups also plan to make 2017 hires from graduates of Master in Management (37 percent), Master of Accounting (23 percent), and Master of Finance (25 percent) programs.

Compensation: MBA Salaries Will Reflect 83 Percent Premium Over Recent Bachelor’s Salaries
Globally, more than half of survey respondents (52 percent) report that MBA base salaries will increase at (34 percent) or above (18 percent) the rate of inflation in 2017. Latin America (74 percent of respondents) and Asia-Pacific (59 percent) have the greatest share of companies that plan to increase MBA salaries either at or above the rate of inflation this year.

A majority of European and U.S. companies (57 percent and 51 percent, respectively) will maintain 2016 salary rates for new MBA hires in 2017. The projected median base starting salary for recent MBA graduates in the U.S. in 2017 is US$110,000, up from a median of US$105,000 in 2016. This represents an 83 percent premium over recent bachelor’s-degree holders in the U.S., who can expect to receive a median starting salary of US$60,000 in 2017.

“Once again, this year’s report brings to light the continued value of the MBA degree to the marketplace,” said Megan Hendricks, executive director of MBA CSEA. “The increased interest in specialty master’s talent provides further indication of the relevance of these programs at our member schools.”

Link to download the full report.

About GMAC: The Graduate Management Admission Council (GMAC) is a global, nonprofit association of 220 leading graduate business schools. Founded in 1953, we are actively committed to advancing the art and science of admissions by convening and representing the industry and offering best-in-class products and services for schools and students. GMAC owns and administers the Graduate Management Admission Test® (GMAT®) exam, used by more than 6,500 graduate programs worldwide, and the NMAT by GMAC™ exam, for entrance into graduate management programs in India.

Source: GMAC news release

While the federal minimum wage rate stands at $7.25 an hour, actual pay for low wage workers varies across the country because some states and cities have adopted higher wages than the nationally-mandated minimum. Studies have been conducted to determine the effect of these increases on employment, but consensus remains elusive because of small samples and specific industry-based studies.

For the first time, a group of researchers at Washington University in St. Louis used a big-data approach to determine the effects of minimum-wage changes on business. Two professors and two doctoral candidates from the Olin Business School processed wage data on more than 2 million hourly workers from across the country over a six-year period. The results? There are winners and losers.


“Asking if a higher minimum wage is good or bad is not productive,” said Radhakrishnan Gopalan, professor of finance at Olin. “It’s not a right or wrong proposition, it’s a nuanced answer depending on the composition of both employees and employers.”

In their working paper, Gopalan and his co-authors — Barton Hamilton, the Robert Brookings Smith Distinguished Professor of Entrepreneurship at Olin, along with Ankit Kalda and David Sovich, both Olin finance PhD students — utilized anonymous data obtained from Equifax, a leading information solutions company that collects data on individuals’ credit and employment histories.

In this map provided by the researchers, the states shaded dark red enacted large minimum wage increases. The medium-red states acted as control states in the data analysis, and the states with light shading were excluded from the data set.

To create a framework from which to analyze the data, they focused on six states — California, Massachusetts, Michigan, Nebraska, South Dakota and West Virginia — that enacted large increases in minimum wage during late 2014 and early 2015. The researchers included data from hourly workers across different industries and studied their employment dynamics for up to one year following the wage increase. Once crunched, the data gave an innovative new look at the effect of a large minimum-wage hike on businesses and employees.

“We found existing minimum-wage employees benefit from minimum-wage increases,” Gopalan said. “Their wages go up, and they are no more likely to lose their jobs as compared to their counterparts in adjacent states. But following state minimum-wage hikes, companies are reluctant to hire new low-wage employees. In the one year following the wage hike, they increase the proportion of higher-wage (read: higher-skilled) employees and reduce the proportion of low-wage employees.”

The effects, while slight, were most pronounced in establishments such as administrative and support services, finance, hotels and food and manufacturing industries.

“For example, our estimates indicate that when Massachusetts enacted a 10-percent increase in the minimum wage, there was a decrease in low-wage workers of 1.6 percent at the average establishment relative to establishments in the neighboring control states,” Gopalan said.  “In California, with the same 10-percent, minimum-wage increase, we saw a 1.2 percent decline in low-wage workers.”

According to Gopalan, these new findings can be of benefit to states and cities making decisions regarding minimum-wage policy.

“States and cities really need to take a look at what the employee composition is,” Gopalan said.  “Are they a growing area where a lot of low-wage employees are entering the labor force? Or do they have existing employees but not a whole rush of new employees coming in? Optimal policy will differ based on these factors.

“For an area experiencing fast growth, having a high minimum wage will be a bad deal for the new entrants as they might have a tougher time finding a job. On the other hand, if you’re in an area whose population is not growing very fast, then raising the minimum wage will definitely benefit your existing low-wage employees, and the number of new employees who are hurt will be a minimum. Optimal policy will also depend on the industry composition of the establishments in the local economy.”

Gopalan says the next step is to further analyze other long-term benefit variables linked to higher minimum wage, including employees’ debt load and credit scores. The research may be viewed here; Gopalan may be reached for comment at gopalan@wustl.edu

Can you name the MBA program with the best job placement record in 2015? That’s right, Olin is number one among the top 25 MBA programs in the U.S. News Best Graduate Schools Rankings released earlier this month. Poets & Quants’ John Byrne has been analyzing the data and shared the stats on his website today.

The Olin Business School at Washington University led the pack with 97.1% of its Class of 2015 employed three months after graduation, followed by the University of Washington’s Foster School, with 95.6% landing jobs. Virginia, Dartmouth, and the University of Chicago business schools rounded out the top five last year, each with 95% or more employed three months after commencement.

Byrne claims that, “2015 was one of the best years ever for graduating MBAs. One school after another reported increasing starting pay for their graduates along with some of the strongest employment numbers since the Great Recession.”

Class of 2016: no pressure, but we’re expecting great things from you, too!

Related post on U.S. News rankings.

Link to Poets & Quants website.

Photo credit: Got Credit

St. Louis skyline at night

Glenn MacDonald, professor of economics and management, shares his views on local employment issues in an interview published on the St. Louis Magazine website today.

From the minimum wage to right-to-work law, the stadium proposal and the startup scene, Prof. MacDonald sounds a bit bah humbug on the prospects of the city creating new jobs and attracting new businesses. His suggestion to improve conditions calls for a more liberal-leaning government and culture that would attract modern, high tech companies.

Link to the interview.