The national unemployment rate fell below 4% in April, and that wasn't good news for warehouses trying to hire logistics workers.
But that’s far from the only supply chain employment concern. Manufacturing has a shortage of people to fill skilled roles. Universities are ramping up supply chain majors and programs to educate future employees. Vocational high schools are giving teens hands-on experience in warehouses, enabling them to get good jobs after earning their diplomas. And a truck driver shortage is spurring legislators to introduce a bill allowing licensed drivers under 21 to transport goods outside their states.
The talent crisis in the supply chain isn't just about skilled and technology-based talent. It’s part of a flat-out labor shortage. With ever falling margins, how can warehouses attract and retain workers when there’s so much competition?
E-commerce growth = Warehouse worker growth
You don’t need to count the number of Amazon trucks traversing your street to know that e-commerce is growing. The ease of clicking and shipping, and expecting items to arrive in hours to days, means that warehouses are growing in size and in the number of locations. And that means employment is growing too.
The demand for workers has increased steadily over the last five years, Nathan Coin, director of divisional operations-commercial division at Aerotek, a national recruiting and staffing agency told Supply Chain Dive. Nationally, his division is scrambling to find traditional warehouse workers to pull orders and move products by hand, in addition to driving forklifts.
Workers have so many employment options that it’s a candidate-driven market. Jobs vary by location, shift and pay. “It’s becoming more of a challenge to retain and keep people because it’s competitive,” said Coin, and demand is strong across North America.
Below, are six market trends recruiters say they are dealing with:
Demand is earlier than peak season
Market-wide competition is growing
Money talks: pay is increasing
Employers are getting creative
Hours and shifts are changing
New workers are failing background checks
Both skilled trade workers, like forklift operators, as well as manual laborers, are needed earlier than the usual August peak season for warehouses serving retailers. Retail warehouse recruiting has been steady all year, when it’s normally slow until August.
“I haven’t hit the peak season yet,” said Stephanie Lamb, Suffolk branch manager at Reliance Staffing and Recruiting in Virginia. “If I’m having trouble now, what will happen in August for distribution centers?”
She said she’s working twice as hard to fill her clients’ positions, and it’s busier than she’s seen in ten years of recruiting.
Competition is strong and it’s not just from other warehouses. It’s from construction, landscaping, shipyards and anywhere else that might offer better pay or conditions.
Warehouse workers earning $9-10/hour for manual labor may look at $12/hour landscaping day work, or even at fast food positions paying more. Lamb said she’s been losing workers to the shipyards, which can pay in the $20/hour range for some positions.
Money talks, and increased pay helps warehouses fill the jobs faster than those offering less.
Companies are beginning to get more competitive with pay, Lamb said. Workers will jump to another company offering them more money or hours once they get experience, and they may not give their current employer an opportunity to match it. They just quit.
With so many of her clients looking for logistics workers, Lamb knows what employers have to pay to get people in the door, and she’ll sometimes talk to companies about doing a wage survey or increasing their offer. Her clients have a range of forklift positions paying $10-14, with another client paying $15-16/hour.
Coin sees workers changing jobs to suit their lifestyles. As a result, companies are creating flexible and less traditional shifts that are more attractive to some workers.
“All companies have different scheduling demands, and they can be creative about how they set it up,” he said. Training is another way to retain workers. That might mean teaching someone in general labor to drive a forklift, which pays better.
“People want full time work,” Lamb said. “They want to know they’re going to get full paycheck and work 40 hours.”
That’s hard for many distribution centers, which ramp up hiring for the peak season and can’t afford to keep workers on full time hours the rest of the year. But they know that they could lose some of their best workers if they don’t keep them busy.
Some warehouses are cutting back second shifts due to a slow-down, but are trying to keep workers on by offering them some hours — even if it’s not full time — in hopes that they’ll stay for peak season.
With a low unemployment rate, it’s harder to guarantee the people available for work will pass the background checks.
Each of Lamb’s clients has its own hiring criteria, but about 95% of them require background checks and drug screenings. Many otherwise qualified workers are failing that step. One client recently asked for 15 new hires. Of those who applied, six failed their screening, but were otherwise would have been approved to work.
Is there an end in sight? In 2008, there was no work, Lamb said. Now there’s a lot of work, but fewer workers. “Something will change the economy and we’ll go in the right direction,” she said. “Right now I’m as concerned as other people. Where are we getting people from?”