There are signs that ever increasing warehouse worker wages may be stabilizing. Ask any warehouse manager and they will tell you that right now, their biggest challenge is finding enough reliable labor. An issue prior to the pandemic, it hit a crisis point when everyone went home, brick-and-mortar businesses temporarily shuttered, and ecommerce demand surged. That trend has carried on into today’s marketplace, but there are signs that the days of increasing warehouse worker wages may be coming to a halt.
Trends in Warehouse Worker Wages
Data from the Bureau of Labor Statistics partly tells the story. In June 2022, warehousing employment hit a high of 1.96 million jobs. Since then, however, the industry has cut over 100,000 jobs. Giants like Amazon and Walmart are among the companies announcing a cut back at fulfillment centers as demand for products begins to cool. A variety of factors, from inflation to the fact that many consumers have slowed their own personal pandemic-fueled spending sprees, have contributed to the cooldown. E-commerce sales, for instance, dropped from a peak of 16.5 percent of overall retail in 2020 to 15.1 percent during the first quarter of 2023.
During the pandemic, warehouses added nearly 700,000 warehouse workers to keep up with ecommerce demand. To bring those workers through the doors, many companies increased hourly warehouse worker wages, averaging out to an increase of eight percent. In Southern California, alone, the number of workers in transportation and warehousing surged by 24 percent, and wages went up along with that growth. Today tells a different story, however.
The labor market is loosening ever so slightly, following rounds of layoffs in the tech industry, information services, construction, and other sectors. The domino effect has slowed the warehousing and transportation industries, too, at least partly solving the issue of the labor shortage. There are still 275,000 more warehousing jobs today than two years ago, but there is relief. Warehouse managers now have a bit of breathing room after three years of worrying their workers could walk out the door and down the road for a bigger salary at any given moment.
How companies deal with this relief may vary. Some operations had resorted to offering attendance bonuses to employees, or bonuses during peak seasons to keep their workers on the job. With a new marketplace, some of the leverage is now returning to employers, who may want to discontinue the sign-on and other bonuses, no longer needing to bring on so many employees.
Despite that fact, however, the average warehouse worker wages remain high, in the range of $23, compared to $14 to $18 prior to the pandemic. Going backwards in salary is likely not a winning proposition, so expect that pay range to remain. Instead, companies may slow hiring and get by with the staff sizes they already have, even if it’s smaller than ideal. Robotics and automation are helping in that regard, too, making it easier to do more with fewer humans, unlike days past. If nothing else, 2023 is bringing back a sense of equilibrium to warehousing, something most companies will view as a relief.
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