As my colleague Clint Reiser wrote a few months ago, warehouse work has been in the news lately. Of course, virtually everyone has relied on direct-to-consumer fulfillment at some point during the COVID-19 lockdowns, which has been a major contributor to warehousing capabilities. Longer term, warehouse labor is increasingly in demand as retail increasingly shifts from stores to e-commerce fulfillment. More recently, unionization attempts at a number of Amazon warehouses have been the subject of mainstream news and trade publications.
In the fall of last year, my colleague Steve Banker wrote that warehouse work woes are worse than ever. Steve wrote that the warehouse and transportation industry saw a record 490,000 openings in July. This gap will widen in the coming months as businesses struggle to keep pace with soaring consumer spending over the holiday season. I had the opportunity to sit down with Steve and talk with him about the warehouse labor market.
Below are some key takeaways from our discussion along with the full video interview.
The big resignation
One of the phrases that has been circulating is the Big resignation. I asked Steve to explain what this means and how it applies to warehouse work. In the fall, we were talking about the Big resignation. More workers left the labor force than joined it; millions of people quit their jobs. Jobs in retail, restaurants, trucking and warehousing are particularly hard to fill. Meanwhile, the growth of e-commerce drives the need for ever more warehouse workers. Workers are increasingly selective. But this argument may be an oversimplification for a more complex reality.
In the United States, three million more workers have retired than expected during the pandemic. For young workers, however, government financial payments gave many a buffer that could last for several months. Although workers can be picky in the short term, most will need to return to work in 2022.
While it seems like warehouse managers can breathe a sigh of relief, that’s not exactly the case. These workers will have more choice. Fewer companies require university degrees, for example. The proportion of young people with an education that extends beyond secondary school has decreased. Vocational schools have closed during the pandemic. You can learn history remotely, but remote learning is not the right way to teach someone to be a mechanic.
This means for the warehouse that some workers who had worked in the warehouse can apply for jobs for which they would have been considered unqualified just a year ago.
How to attract warehouse workers
To attract needed workers, companies pay higher wages to new workers and offer bonuses and better benefit plans. As young people return to work in 2022, the need to do so will decrease.
Yet many companies will have more jobs than applicants. Companies could consider reviewing their policies around who is qualified for employment and be more open to hiring people with criminal records and people with disabilities. This won’t completely solve the problem, however. Significant wage increases will have to be paid to retain the existing workforce. This will be partly due to high inflation. But it is also because the high wages paid to new workers, who cannot work at the same level of efficiency as the existing workforce, create discontent among existing workers. There will be big spikes in increases in the warehouse over the coming year.
In 2022, it will be a scramble to retain the warehouse workers we need and hire new workers. But it doesn’t make sense to hire someone who can’t work efficiently, accurately, safely, or who is likely to leave after a short period of time. Material handling automation, robots, warehouse and labor management system software can all help in some of these dimensions. But ultimately, a warehouse that excels in the dimensions of productivity, accuracy, safety, and employee retention uses a relatively small number of best practices. Most of these best practices relate to how managers manage their workers.