On the surface, the US employment report looked positive. Unemployment had fallen to 4.8%. But more people have left the labor market than they have joined. (The calculation gives the impression that the unemployment rate should have increased, but the unemployment rate reflects those who are 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.
Warehouse labor shortage
The warehouse and transportation industry recorded a record 490,000 openings in July. This gap will widen over the next few months as businesses struggle to keep up with soaring consumer spending during the holiday season. The ARC Advisory Group survey showed that 35% of warehouses experience a seasonal increase in the number of workers they employ of more than 20%. Eight percent of warehouses have an increase of over 100%.
The US Department of Labor does not split job postings for truck drivers against job postings for warehouse workers. But for the record, it seems that hiring truck drivers is even more difficult than hiring warehouse workers. Nonetheless, the 490,000 industry openings reported by the Ministry of Labor clearly underestimate the number of warehouse workers needed. Indeed, it is not only the contract logistics sector that hires labor for its warehouses. Retailers, manufacturers and distributors all have warehouses. They are also looking for workers for their warehouse operations. Amazon, for example, uses most of the hundreds of thousands of warehouse workers they employ to support their retail operations, not their contract logistics division.
The rush to hire before the holidays is on. Amazon hopes to hire 125,000 warehouse and logistics workers, Walmart
The Washington Post article quoted Sabrina Wnorowski, vice president of human resources at Radial, as saying, “Every year we say, ‘Wow, this is really hard’ – and every year it gets harder. Radial operates distribution centers for well-known clothing brands.
The numbers back it up. In a survey conducted by the ARC Advisory Group in 2018, when warehouse managers were asked how many applicants they received per position in 2013, the most common response was between 6 and 10. In 2018, the year of the survey, this number fell to between 2 and 5 applicants per job. Figures from the Ministry of Labor suggest that there are now multiple warehouse jobs per applicant.
It’s not just hiring that’s difficult
Once a worker is hired, he must be upgraded. ARC research shows that only 29% of warehouses can upgrade a new worker in less than a month. “Up to Speed” refers to the ability to work at average speed of all warehouse workers at that site.
And then once hired, companies have to retain their workers. Before the pandemic, the CRA investigation showed that U.S. warehouses were surprisingly good at retaining workers. More than half of the companies surveyed had warehouse operations with sales below 10 percent.
But some big companies are doing much worse. Even before the pandemic, Amazon was losing about 3% of its hourly associates every week! This means that its turnover was around 150% per year! The warehouse industry has already gone through millions of workers, some of whom, according to the Washington Post, say they have given up warehouse jobs altogether.
In all industries, a record number of workers are leaving their jobs. Some 4.3 million people left their jobs in August, according to the monthly survey, or about 2.9% of the workforce, according to data released by the Ministry of Labor. Recent surveys conducted by Gallup, Microsoft
Wages are increasing in many sectors. Workers have choices. The United States has 5 million fewer jobs than before the pandemic.
Warehouse work can be demanding
Warehouse work can be difficult. Some e-commerce warehouses have workers walking more than 15 miles in a row. In some cases, automation brings goods to packing stations where workers stay up to 10 hours a day to pack orders.
Labor management systems, which are used in many large warehouses, if not properly calibrated, require workers to work at very high speeds. Several years ago, a Mother Jones article reported that an unnamed e-commerce giant, arguably Amazon, had labor standards that caused employees to work too fast. Amazon may still be guilty of this. When workers are pushed, injury can result. Data from the Occupational Safety and Health Administration (OSHA) shows that Amazon workers are injured at a rate almost double that of other warehouses.
As warehouses prepare for the seasonal increase in work, they can operate 24 hours a day. Very few people want to work in the middle of the night. And short-staffed managers may require warehouse workers to work 60 hours a week or more.
But not all warehouse work is exhausting. In chemical warehouses, safety comes first over speed. Forklift operators have a less tiring job than those who have to travel miles a day to select controls. And warehouses with less than 25 employees seem more user-friendly – they certainly have an easier time retaining workers.
Pay more to get more?
The Washington Post reports that companies that have opened warehouses are offering more money and other financial incentives. The Post article reports that “Radial has responded to labor shortages by offering daily raffles with prizes like PlayStation and iPads, as well as on-site pizza and food trucks in an effort to attract workers. Difference
Anecdotal evidence can be misleading. Statistics from the US Department of Labor show that in the warehousing industry, the average salary for non-supervisory employees was $ 19.57 last year. The unsupervised workforce includes maintenance associates, inventory or shipping clerks, analysts, and other tasks that do not involve working on the warehouse floor. The $ 19 plus an hour they reported is more than what the vast majority of workers who pick, pack and ship goods to a warehouse earned last year.
Labor statistics have also shown that warehouse wages among non-management employees have increased at a cumulative average growth rate of 4.3% since 2016. This is higher than the inflation rate, but the cumulative numbers do not suggest the same panic for hiring workers that some companies are currently. experience.
Part of the rush to hire is based on the need to hire temporary workers to support the seasonal increase in demand. The churn rate has always been high among temporary workers. It should be. If a worker has a choice between a permanent job and a temporary job, it would be shortsighted not to jump. Perhaps a fairer question, one that we cannot answer based on current data, is how difficult is it to hire a permanent full-time warehouse worker?
Hiring for the warehouse is clearly more difficult than it used to be. Getting workers is a growing concern for warehouse managers. But not all warehouses are flowing at the same rate as Amazon.