On the surface, the US jobs report looked positive. Unemployment fell to 4.8 percent. But more people left the workforce than joined it. (The math makes it sound like the unemployment rate should have gone up, but the unemployment rate reflects those actively looking for work.)
Many sectors that pay low wages have struggled to find workers. Contract logistics – companies that provide warehousing services – certainly fall into this category.
Labor shortage in warehouses
The warehouse and transportation industry posted a record 490,000 openings in July. That gap will widen in the coming months as companies struggle to keep up with the holiday season’s surge in consumer spending. ARC Consulting Group’s Warehouse Labor Survey shows that 35% of warehouses have a seasonal increase in the number of workers they employ by more than 20%. Eight per cent of depots have a surge of over 100%.
The US Department of Labor does not divide job opportunities for truck drivers versus job opportunities for warehouse workers. But from the anecdotal, it seems that hiring truck drivers is more difficult than hiring warehouse workers. However, the 490,000 industry openings reported by the Labor Department clearly underestimate the number of warehouse workers needed. This is because it is not only the contract logistics sector that hires labor for their warehouse. Retailers, manufacturers and distributors all have warehouses. They are looking for workers for their warehouse operations as well. Amazon, for example, uses most of the hundreds of thousands of warehouse workers it employs to support its retail operations, not its contract logistics department.
A pre-holiday rush for hiring is on. Amazon hopes to hire 125,000 warehouse and logistics workers, Walmart wants 20,000 temporary logistics workers, and UPS, Kohl’s and Target plan to hire about 100,000 each.
“Every year we say, ‘Wow, this is really hard’ — and every year, it gets more difficult,” Sabrina Worowski, Radial’s vice president of human resources, was quoted as saying by The Washington Post. Radial operates loyalty centers for well-known clothing brands.
The numbers support it. In a survey conducted by the ARC Consulting Group in 2018, when warehouse managers were asked how many applicants each job received in 2013, the most common answer was between 6 and 10. By 2018, the year of the survey, that number had dropped to between 2 and 10 5 applicants for each job. Department of Labor figures indicate that there are now multiple positions in the warehouse for each applicant.
It is not only recruitment that is difficult
Once the worker is set, they must be bred to speed. ARC research shows that only 29% of repositories can bring the new worker up to speed in less than a month. “Up to speed” refers to the ability to operate at the average speed of all warehouse personnel at that location.
Then, once hired, companies need to retain their workers. Before the pandemic, ARC survey research showed that US warehouses were surprisingly well kept on staff. More than half of the companies surveyed have warehousing operations with a turnover of less than 10 percent.
But some big companies are doing much worse. Even before the pandemic, Amazon lost about 3 percent of its partners every week! This means that her turnover was about 150 percent per year! The warehouse industry has already been run by millions of workers, some of whom, the Washington Post reports, say they have split warehouse jobs altogether.
In all industries, there is a record number of workers leaving their jobs. About 4.3 million people quit their jobs in August, according to the monthly survey — about 2.9 percent of the workforce, according to data from the Department of Labor. Recent surveys by Gallup, Microsoft and Adobe found that 37% of workers reported that their bosses expected too much from them during the pandemic. Many warehouse workers worked in designated industries as essential workers. Many of these workers felt pressured to work despite the environment they felt was unsafe.
Wages in many industries are rising. Workers have options. The US has 5 million fewer jobs than it did before the pandemic.
Warehouse jobs can be demanding
Warehouse work can be challenging. Some e-commerce warehouses have workers walking more than 9 miles on a shift. In some cases, automation brings goods to filling stations where workers stand for up to 10 hours a day to fill orders.
Labor management systems, which are used in many large warehouses, if not properly calibrated, require workers to work at very high speed rates. Several years ago, a Mother Jones article reported that the unnamed e-commerce giant, no doubt Amazon, had labor standards that drove employees to work very quickly. Amazon may still be guilty of this. When workers are pushed, injuries can occur. Occupational Safety and Health Administration (OSHA) data shows that Amazon workers are injured at nearly twice the rate of other warehouses.
As warehouses prepare for the seasonal surge of work, they can operate 24 hours a day. Very few people want to work in the middle of the night. Understaffed managers may require warehouse workers to work 60 hours a week or more.
But not all warehouse jobs are cumbersome. In chemical warehouses, safety is prioritized over speed. Lift truck drivers have a less stressful job than those who must walk miles daily to do pick-ups. And warehouses with less than 25 employees seem friendlier – they definitely have an easier time keeping workers.
Pay more to get more?
The Washington Post reported that companies with open warehouses offer more cash and other financial incentives. The Post article stated, “Radial has responded to the labor shortage by offering daily raffles with prizes like PlayStations and iPads, as well as on-site pizza parties and food trucks in an effort to attract workers. Gap promotes 24-hour telehealth appointments and 50 percent discounts on its clothing. Aldi has increased the average starting wage in warehouses to $19 an hour. Walmart promises additional pay for supply chain employees who attend all scheduled shifts. Sleep Number offers login bonuses of up to $1,000 at distribution centers in Ohio and California, as well as free mattresses for all new employees.”
Anecdotal evidence can be misleading. US Department of Labor statistics show that in the warehouse industry, the median wage for non-supervisory employees was $19.57 last year. Non-supervisory work includes maintenance assistants, inventory or shipping clerks, analysts, and other jobs that do not involve work on the warehouse floor. The $19 plus hour they reported is higher than what the vast majority of workers picking, packing, and shipping goods earned in warehouses last year.
Labor statistics also showed that warehouse wages among non-supervisory employees have risen at a cumulative growth rate of 4.3 percent since 2016. This is higher than the rate of inflation. But if we were really in a hiring crisis, wouldn’t they go up faster?
Part of the rush to hiring depends on the need to hire temporary workers to support the seasonal increase in demand. The churn was always high among the temporary workers. It must be. If a worker has a choice between a permanent and a temporary job, he will be shortsighted not to jump. Perhaps the fairest question, one we can’t answer based on current data, is how hard would it be to hire a full-time permanent warehouse employee?
Recruitment in the warehouse is clearly more difficult than it used to be. Getting workers is a growing concern for warehouse managers. But not all warehouses pass through workers at the rate that Amazon does. Not all warehouse operations need to employ large numbers of temporary staff to support the seasonal increase in demand.