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What labor shortage? Some retailers now say they’re overstaffed.

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Customers walk outside a Walmart store with the company's logo prominently displayed.

Walmart said overstaffing, among other factors, brought down its quarterly earnings. The retailer's not alone. Justin Sullivan/Getty Images

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One hallmark of the COVID economy has been a labor shortage, with employers saying they lack enough workers to operate at full steam.

But in its earnings call this week, Walmart said overstaffing contributed to its profit decline last quarter. Amazon said something similar earlier this month. What’s going on here?

As a shopper, you may feel like the pandemic is over. Retailers? Not so much, because COVID outbreaks can still take down their workforce.

“You know, in terms of staffing for that, it’s challenging,” said John Talbott, who directs the Center for Research and Education in Retail at Indiana University.

Companies need extra employees when people call out sick. And they’re still trying to figure out whether people will shop online or in stores and whether they’ll keep using curbside pickup. This affects how companies hire, Talbott said.

“And so you end up having some excess capacity that I don’t think they would have expected.”

He said that, short term, overstaffing is a better option than missing sales. And it means some retailers are hiring more people part time, according to Alan Benson, who studies staffing strategies at the University of Minnesota.

“Companies are going to be experimenting with more models of achieving greater flexibility, and that could very well be a long-term trend to come,” he said.

A trend of hyper-part-time or seasonal workers worries David Weil, a labor market expert at Brandeis University. Because he said the whole takeaway from the Great Resignation is that workers are looking for consistency and opportunities to grow.

“This is not the time to try to play games and have more volatile, temporary kinds of jobs, but more to invest in a workforce that will stay with and benefit a company for a longer haul,” he said.

Right now, businesses are on a seesaw — teetering between the shifting labor demands of the pandemic and workers’ demands for better jobs.

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