Warehouse labor market: Four trends to watch

The latest labor market data confirm that supply chain labor shortage is the most urgent threat businesses face in the shopping season of 2021. The trends are so worrisome that there is an increasing sense of a profound shift in the labor market. And that the era of low wages for low-skilled jobs is gone.

Four key trends define the current labor market status. We have rounded up the key market data and industry-leader insights below.

Understanding these trends will help you shape your approach to managing the labor shortage – in the 2021 shopping season and beyond. Our whitepaper on managing warehouse labor shotages delves deeper into these trends, their causes and best ways to bridge the labor gap.

The statistics data from major developed economies all point to a deepening labor shortage. And the increase is unrelenting.

Nearly 70% of warehousing and transportation businesses have trouble hiring skilled workers, shows the quarterly survey by the recruiting giant Manpower. The survey, covering 45,000 employers in 43 countries, unveiled that the largest EU economies are all seeing above-average hiring challenges.

In the US, job openings in the warehousing and transportation industry pushed through a record of 500,000, the latest available data show.

In the UK, the labor gap has already caused the disruptive fuel shortage. The empty shelves are expected to become a wide occurrence.

In Germany, the European logistics powerhouse, 43.9% of companies in the warehousing industry reported they have difficulty recruiting skilled employees, shows a survey by the influential think thank ifo Institute.

The steep rise in reported hiring difficulties has prompted the central bank to voice concern over labor shortage limiting the GDP growth now that the economy is finally rebounding.

The immediate, direct result of the labor shortage are the rising costs.

The most recent US data from the Bureau for Labor Statistics shows that the hourly wages for nonsupervisory employees in the Warehouse and Storage industry have pushed through the barrier of $20 for the first time. In the UK, the wage spike reached 30%.

And it’s not just the hourly costs: market leaders, including Amazon and Walmart, have been offering signing and retention bonuses or free college tuition.

Salesforce expects the US retailers will see an extra $223 billion in the cost of goods sold this holiday season. The company, which has direct insight into over one billion online shoppers, estimates the increased costs will result in a 20% hike in consumer prices this holiday season.

The quarterly company reports are also confirming the effects of labor shortages.

In their latest financial update, FedEx reported that the constrained labor market caused an estimated quarterly increase in costs of $450 million year over year. The higher cost is not just a result of increased wages but also of “network inefficiencies.” The scale of these inefficiencies is unsettling – FedEx reported having to reroute up to 600,000 packages daily because it can’t process them in some locations.

As the labor market statistics reach new records, insights and forecasts from industry leaders, analysts and associations all speak of an unprecedented situation. The unease and uncertainty come across clearly.

“We’ve never seen a market like this” seems to be a universal feeling, echoed across markets. Another fear is that – it may already be too late to “save Christmas” for many businesses.

What is concerning is that higher wages do not seem to be enough to attract employees. Employment data appears to show that many people have stopped looking for work. The difficult working conditions in warehouses and fulfillment centers are certainly an issue here. These are the ‘3D’ jobs – dull, dirty and dangerous.

Making these jobs easier and more efficient through automation and innovation is thus a vital part of a long-term approach to managing the labor shortage.

Learn more on how to manage the labor shortage in warehousing and logistics in our free white paper. We have compiled some of the most common tactics, from non-monetary benefits to increasing safety and productivity for a more rewarding workplace.