Holiday season brings new constraints on warehouse labor shortage

The current labor crisis

As America attempts to fix record-breaking unemployment rates caused by the COVID-19 pandemic, employers are finding unexpected trends in the job market. Workers now have the ability to choose where they want to work and make greater demands in pay and benefits, as there are so many job openings available. Companies in need of labor need to recognize the job market is not returning to pre-pandemic norms. With a more informed group of workers entering the labor force, they hold all the leverage.

While normal ways of life were put on pause during the pandemic, workers had time to research and gain knowledge on their job industry. Some realized their previous job wasn’t worth the pay, others demanded better working conditions. The results of the latest survey from Principal Financial Group, cited in this LinkedIn News round-up, state that more than a quarter of American workers are at least contemplating changing jobs, and over two-thirds of employers are?worried about the competition?for candidates.

With the holiday season looming, America's labor shortage, also known as ‘The Great resignation,’ is only set to widen the current constraints on the supply chain.

What’s really causing the supply chain labor shortage?

The warehouse and transportation industry have been hit harder than most by the lack of labor availability. Many warehouse workers who were deemed “essential” during the pandemic continued working due to pressure, even when they felt the environment was unsafe. However, the number of new workers entering the industry is declining. As the United States is entering a post-pandemic state,?job seekers?have realized they don’t want a warehouse job due to the often-grueling work required. Some warehouses for e-commerce have workers?walking over 9 miles per shift. In others, automation equipment brings goods to packing stations where?workers can stand for up to 10 hours a day. Poorly calibrated labor management systems, often used in large warehouses, require workers to work at a very high speed. If laborers are pushed too fast at unattainable speeds, injuries are undoubtedly a possibility.

While seasonal turnover is standard in the warehouse industry, in just four years turnover went from?40.3 percent in 2016 to 59.5 percent in 2020?in transportation, warehousing, and utilities combined. The manufacturing industry on the other hand experienced an increase from?27.2 percent to 44.3 percent. Such high turnover rates are an issue since warehouse labor is needed beyond the contract logistics sector – the position is essential for retailers, manufacturers, and distributors to operate.

With the holiday season fast approaching, the warehousing and transportation industry is in a time crunch to hire as many employees as they can. Amazon alone is hoping to add 150,000 warehouse and logistics seasonal hires. Walmart is planning for 20,000 temporary workers in logistics, and UPS, Kohl’s and Target all are aiming for 100,000 new hires each. Despite high hopes,?a record number of 490,000 job openings?was reached in July 2021. With millions leaving their jobs each month since, the gap will only widen as companies struggle to maintain productivity during the consumer spending surge around the holidays.

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What does this mean for the future?

Companies in dire need of warehouse employees are adapting their hiring strategies to be more appealing, although hiring alone is not the only problem. Retaining their staff, training new hires, and keeping working conditions safe are a high priority. With the new wave of bargaining power in the hands of laborers, companies need to pay more to get more.

In order to gain more hires, warehouse companies are raising their pay.?Aldi?increased the average starting pay in warehouses to $19 an hour, and Walmart is promising extra pay for supply chain employees who have showed up to all scheduled shifts.?To retain current staff and battle labor churn, employers will need to get creative with the benefits they’re offering. Radial spoke to the?Washington Post?on their strategy involving daily, high value raffles where employees could win PlayStations, iPads, and more.

But money is only a part of the incentive. Instead, companies should focus on the work experience. With the labor shortage nowhere near over, warehouse companies should consider additional methods to improve overall quality of labor in their warehouse. While making your employees’ jobs easier, your warehouse can become more efficient and able to maintain demand with fewer workers. To make life easier for your workforce, you could invest in voice technology, autonomous mobile robots or other forms of automation. At K?rber, there is no shortage of supply chain solutions to help meet your warehouse and labor goals.

Read more about this topic here on the K?rber Supply Chain blog.