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How To Retain Warehouse Workers In A Competitive Market

How To Retain Warehouse Workers In A Competitive Market

Across America, unemployment is the lowest it’s been in 10 years. After a decade of slowed growth and recovery from the 2008 financial crisis, things are starting to look up.

As the economy continues to recover, the demand for workers -- especially well-trained workers -- is only going to go up. There is already less than one unemployed person for every available job in America today. This translates to increased competition among employers in key industries -- and the logistics industry is feeling the pressure.

While wage growth has been slowed for the last few years, it is happening, and employers today may see their warehouse floors or production lines empty if they don’t keep up.

A Changing Labor Force

There are a few reasons as to why the economy is in the state it’s in. One reason is simply natural growth and recovery after a crisis; 10 years on, we’re starting to see things get a little better.

That isn’t the whole story, however. Shifting demographics are also leading to changes in who is available to do what jobs. As more and more baby boomers retire, positions in the industry open up for new bodies -- new bodies that aren’t there. Millennials, college-educated in levels unheard of in past generations, are not replacing these blue collar jobs at the same rates that they’re being vacated.

With new jobs being added to the economy at a healthy pace -- as many as 164,000 jobs were added in April of 2018 -- labor shortages are only going to increase as the unemployment rate heads toward a possible record low of 3.7%.

Minimum Wage Expectations

Labor shortages and increased demand for workers lead to rising wages. Warehouse workers can and will jump jobs for a $0.25 to $0.50 hourly increase in pay; retaining a consistent workforce in the warehouse or on production lines while paying minimum wage is no longer possible.

Some companies are competing by offering so-called white collar job perks to blue collar workers. Increased scheduling flexibility, perks like on-the-job meals, aid with transportation, and other tactics all will help bring value to a job to workers, but primarily, people want one thing: increased wages. Luckily for employees -- the longer the economy continues its hiring spree, the longer wages will need to stay competitive -- but employers need to be ready to keep meeting demand.

Retaining a Workforce

If an employer wants a worker who will show up -- one with no training, who simply will do the job at an entry level -- their pay needs to start at $12 an hour. Some supply chain managers, depending on the city,  are paying $13.50 an hour. In order to attract and retain workers who are good at what they do and who have been trained for the job, an employer needs to offer them 10% to 15% more than they’re already making. Even employers who already have been increasing pay may find they’re still not competitive as warehouses around the country start to feel the strain.

Increased wages are ultimately positive for the economy -- many warehouse workers are more able to break even with the higher wages -- as they lead to increased financial stability and freedom within a community, and wage growth has been unusually slow in the last decades. However, today’s increased wages create an operational problem for employers who need to increase their budgets since it isn’t easy to find employees who are affordable, available, and well-trained.

In order to staff warehouse floors and production lines with competent employees that won’t leave for higher-paid pastures, companies may benefit from the guidance and help of a staffing agency that knows what job seekers are now expecting.

DG saw a 47% increase in placing workers in warehouses over the 2017 - 2018 period -- why not get in touch with us?