newsworthy
Warehouse, DC labor crunch
approaching crisis levels at worst time,
survey finds
THE WAREHOUSE AND DISTRIBUTION CENTER
(DC) industry is facing its most severe labor shortage since
2007, a potential crisis that could affect peak holiday season
fulfillment operations and carry over well into next year
and beyond, according to ProLogistix, a firm that provides
staffing services for warehouses and DCs.
Brian Devine, president of Atlanta-based ProLogistix,
which for 15 years has conducted an annual survey of
warehouse and DC labor trends, said his company and rival
firms are having trouble finding qualified applicants to staff
their clients’ warehouses as they ramp up for the holiday
crunch. Three out of every four applicants never make it
to interviews due to drug-related offenses or criminal histories, among other problems, Devine said. But even the
total pool of warehouse applicants has been diminishing,
Devine said.
While Devine expects the shortage of qualified warehouse labor to persist long after the holidays, the immediate concern is the pre-holiday shipping season, when
retailers, on average, increase warehouse and DC staffing
by 43 percent in the three months leading up to Christmas.
Devine worries that there aren’t enough workers to meet
the burgeoning fulfillment demand. Even collaborative
efforts with competitors to meet staffing levels are falling
short, he added. “A customer needs 20 workers. We have
12. I contact a competitor to see if it can fill the remaining
eight vacancies, and they only have four candidates,” he
said in a phone interview.
One factor contributing to the systemwide shortfall is
the explosive top-line growth of Amazon.com and its voracious appetite for fulfillment labor, according to Devine.
However, he said the segment would be confronting a labor
shortage even if Amazon didn’t exist, adding that companies were scrambling for labor eight to 10 years ago when
Amazon was not nearly the potent force it is today. Seattle-based Amazon, the world’s largest e-tailer, said it would fill
about 80,000 positions for peak season.
At the same time, wages in the past three months have
increased much faster than Devine said he had anticipated.
Initially, Devine thought wages would rise in 25-cent-
an-hour increments per quarter, resulting in a $1- to
$1.25-an-hour increase over the next 12 to 18 months.
Instead, wages are rising at levels that will result in pay
gains of up to $2 an hour over that same period, he said.
The sudden changes in wage trends will force many ware-
house and DC managers to revise their 2014 and 2015 bud-
gets to account for higher labor costs, Devine said. Most
ProLogistix clients are aware of the problem and are taking
steps to adjust, albeit reluctantly, he said.
Devine said he expected some level of increase because
warehouse wages have been virtually flat for about a decade.
For example, a forklift operator, on average, earns about 25
cents an hour more today than in 2004, he said. As far as
forklift operators are concerned, the greatest demand today
is for tech-savvy workers who are comfortable around
machines that have become more automated, Devine said.
Due to the tight supply of DC labor, companies that have
yet to bump up workers’ wages, or don’t do it soon, could
lose workers as they jump to other jobs paying 50 cents or
$1 more an hour for pre-holiday work, Devine said. “There
will be a lot of plundering” of workers leading up to the
peak of the holiday fulfillment period, he said.
NEW RECRUITING STRATEGIES
Gilt Groupe, a fast-growing online shopping company
headquartered in New York, is experiencing a tight labor
market around its main fulfillment facilities in Louisville,
Ky. “There is a lot of competition [for workers] in this
geography,” said Michelle Ball, Gilt’s senior professional
of human resources, in a phone interview from Louisville,
where she is based. Gilt’s Louisville operation consists of
a 302,000-square-foot fulfillment center and a separate
100,000-square-foot location. It also manages facilities
in Brooklyn, N.Y., and Las Vegas that are used p. 18
