DC Velocity - September 2016

www.dcvelocity.com SEPTEMBER 2016 DC VELOCITY 31 positions converting to full time in 2013 and 2014.

The current labor market will require companies to pay peak season premiums of $1.50 to $3 per hour to attract and retain workers through the fourth quarter. Additionally, weekend shifts and second and third shifts will require a $1-per-hour shift differential during this upcoming peak season to meet demand. I anticipate that companies will have to include more part-time positions to attract people who want to work just 20 to 25 hours per week. Fortunately, many of the jobs created during the peak season have a very short learning curve, so employees can be productive with just a few hours of training.

QIt sounds like workers have bargaining power?

AWorkers are in a better posi- tion now than at any time since 2007. With unemployment rates well below 5 percent in major logistics markets, good workers are reaping the rewards of an employer base that has become more creative and generous in its attempts to attract and retain their services. The generosity starts with a competitive pay rate. We know the most important factor in attracting employees is competitive pay. Secondarily, employees want job security so they can gain a sense of financial stability. After over a decade of stagnant wages, we have seen an 11-percent increase in pay rates for logistics employees in the last

24 months, and I anticipate that rate of pay increases will continue for the next year.

QTo what levels can wages rise before they become a pain point for managers?

A I expect average pay rates for hourly logistics employees will rise until we get to $14 per hour. At
that point, we should start to see some leveling off. That
will put associates’ wages in line with their spending
power back in 2002. Wages will vary depending on the
availability of labor in a specific market and the min-
imum wage laws for each market. Another important
variable affecting pay is the complexity of the position.
For instance, an associate who is expected to operate
four different types of forklifts will warrant a higher pay
rate than an associate who is operating only a sit-down
forklift.

QWhat do your customers tell you about the role that robotics or other forms of automation will play in managing through peak season?

A I get a mixed response. On one hand, technological improvements in robotics allow some functions to be performed by a robot at a much lower cost than having a person perform that same function. But that activity has to be repetitive enough and be required to be performed for a duration long enough to warrant the cost associated with purchasing, setting up, and programming the robot to perform the task. Many of today’s consumers want their purchases to be customized, which creates a higher demand for the flexibility you can only get by using employees.

QTo what extent can automa- tion offset the impact of a
shortage of human labor?
AThe use of automation can help make employees sig-
nificantly more productive. We
are seeing automated solutions
implemented in almost every
aspect of a distribution or fulfill-
ment center’s operations, from
a basic corrugated box assembly
to a complex conveyor system tied to a pick-to-light
station. The combination of the right automation and
the right work force can drive down labor costs consid-
erably. While the use of automation and robots reduces
the headcount requirements in a facility, the remaining
positions often require an advanced skill set to opti-
mize the capabilities of the new technology.