Skip to content
Search AI Powered

Latest Stories

newsworthy

Wages for warehouse labor to continue to climb—along with all else in the DC

Hourly workers' wages must climb $2 to be competitive, staffing firm says; owners brace for higher costs, and higher demand.

In 2002, the average hourly wage for a warehouse and distribution center worker in the U.S. was $10.31, according to Atlanta-based staffing firm ProLogistix, which on a weekly basis employs about 12,000 people in industrial facilities nationwide. By 2012, that same hourly wage had risen, on average, by a measly 15 cents. During the same period, the Consumer Price Index (CPI), the federal government's broad measure of the direction of consumer prices, had climbed about 22 percent.

Since the 2012 peak shipping season, however, wage growth has accelerated. Today, the typical warehouse worker pulls down $11.46 an hour, according to ProLogistix data. The increases are expected to keep coming at least for the next 18 months to two years, plateauing about the time the next recession kicks in, according to Brian Devine, the firm's president.


That's because even with the gains over the past four years, average wages have risen only 11 percent in total since 2002, while the CPI has increased 31 percent during that time, according to ProLogistix data. It will take another $2-an-hour increase, to levels approaching $13.50 an hour, for wages to be considered competitive and finally pull workers even with 2002 levels on an inflation-adjusted basis, Devine said.

Wages in that range should also attract a large number of new entrants, and end whatever labor-market tightness currently exists, Devine said. (ProLogistix could not quantify the extent of a labor shortage.) In addition, a worker earning wages in that range would be less prone to jump ship to a rival for more money, Devine added.

But the prospect of labor stability will come at a price for warehouse owners, operators, and associated executives, Devine said. For example, the $1-per-hour wage increase since 2012 has increased the compensation costs—wages, benefits, and government compliance expenses like FICA and unemployment tax—by $500,000 for a 200-employee facility, according to Devine's calculations. Consultancy CBRE Inc. said in a March report that a $1 increase in average hourly wages amounts to a $1 million rise in total annual labor spend for a 500-employee facility.

Labor is not the only warehouse line item that's going up. The cost of buying lift trucks will rise by 3.4 percent a year over the next three years, according to recent data from consultancy IBISWorld Inc. Pallet jack costs will increase 3.7 percent a year over that time, the firm projects. The cost of a wood pallet will increase by 2.9 percent a year over the next three years, while the cost of services like building and maintaining heating and air conditioning systems will climb 2.7 percent a year during the same period, IBISWorld said.

The good news for warehouse executives is that costs are rising in concert with increased demand. According to real estate advisory firm Colliers International, which represents mostly "big box" owners and tenants, the U.S. industrial-vacancy rate declined in the first quarter to 6.3 percent, the 22nd consecutive quarter of declines and the lowest vacancy rate in more than a decade. More than 63.8 million square feet was absorbed in the first quarter, a 9.6-percent increase from year-earlier levels and a signal that demand continues to outpace supply, Colliers said.

Frederick Regnery, a principal at the firm, said he sees nothing in to alter the trend in the near term. Corporate users are now approving large projects that had been postponed during the downturn, Regnery said in an e-mail. Supply has been constrained for years by disciplined developers who didn't overbuild leading into the recession, Regnery said. As a result, the market has yet to catch up to the virtual absence of speculative, or "spec," projects that got the residential and commercial real estate markets in trouble nearly a decade ago, he added.

Perhaps most profound is what Regnery called a "structural shift" in the way consumers purchase products, and the manner in which companies fulfill and distribute them. The phenomenon of e-commerce is "creating demand for new types of modern DC facilities."

"This is the most landlord-favorable market in my career," he said.

The massive fulfillment centers being developed for, and occupied by, e-tailers, traditional retailers, and distributors are driving up costs ranging from hourly labor to equipment and technology to a multifold increase in the number of parking spaces to accommodate a bigger workforce.

Demand for workers will rise as fulfillment moves away from building pallet-sized shipments that move in a business-to-business network to the more labor-intensive work of handling individual items, known as "eaches," which are picked, packed, and shipped to a residence, Devine said.

The Latest

More Stories

DHL graphic on online shopping marketplaces

DHL report shows seven factors about American online shoppers

Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.

First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).

Keep ReadingShow less

Featured

schneider app screenshot for owner operators

Schneider seeks more business with owner-operators

Transportation and logistics service provider Schneider National Inc. is reaching out to owner-operators, encouraging them to do more business with the Wisconsin company using an updated digital platform.

Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.

Keep ReadingShow less
Logistics economy grew in October

Logistics Managers' Index

Logistics economy grew in October

Economic activity in the logistics industry continued its expansion streak in October, growing for the 11th straight month and reaching its highest level in two years, according to the most recent Logistics Managers’ Index report (LMI), released this week.

The LMI registered 58.9, up from 58.6 in September, and continued a run of moderate growth that began late in 2023. The LMI is a monthly measure of business activity across warehousing and transportation markets. A reading above 50 indicates expansion, and a reading below 50 indicates contraction.

Keep ReadingShow less
port of vancouver

West coast dockworker strike could dent Canadian economy

The port worker strike that began yesterday on Canada’s west coast could cost that country $765 million a day in lost trade, according to the ALPS Marine analysis by Russell Group, a British data and analytics company.

Specifically, the labor strike at the ports of Vancouver, Prince Rupert, and Fraser-Surrey will hurt the commodities of furniture, metal products, meat products, aluminum, and clothing. But since the strike action is focused on stopping containers and general cargo, it will not slow operations in grain vessels or cruise ships, the firm said.

Keep ReadingShow less
trucks used by jillamy 3PL

Texas 3PL Mode Global acquires Jillamy’s freight brokerage arm

The Texas third-party logistics firm (3PL) Mode Global has acquired the freight brokerage business of supply chain service provider Jillamy, saying on Monday that the deal advances its strategy of expanding its national footprint.

Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.

Keep ReadingShow less