Demand Rising for Holiday Peak Workers in Distribution Operations

Merchant shippers are seeing an especially tight labor market for holiday peak workers in distribution and fulfillment centers this year, as market forces are contributing to decreased availability and increased competition for temporary help.

“We’re seeing demand up again this year,” said Lauren Griffin, a Senior Vice President with staffing agency Adecco. “One of the bigger changes this year is that the candidate pool continues to tighten. Although we did experience it last year, we’re seeing increased pressure on the wage base.”

As the unemployment rate drops, Griffin said, there are fewer workers willing to consider seasonal work, many of whom are students or retirees, as well as those who have lost other positions. So those in the market can command higher wages than in the past.

This situation is exacerbated by the frenzy that is the holiday shopping/shipping season. eMarketer is predicting holiday ecommerce sales will grow 13.9% this year, down slightly from 14.4% in 2014, with overall retail sales expected to increase 5.7% to $885.7 billion, the biggest gain since 2011.

S. Anthony Iannarino, President of Solutions Staffing in Columbus, OH, a firm that specializes in ecommerce fulfillment labor needs, said he is seeing greater wage pressure and demand in every market he serves. In addition to Columbus, that includes busy hubs in Cincinnati, OH, Charlotte, NC and Phoenix, AZ, where concentrations of major ecommerce companies stoke the war for workers.

“There are still people available, but the companies that succeed in getting those people are being more flexible about what shift they allow people to work,” Iannarino said. “They’re trying to be as flexible as they can to match up with what (workers) need.”

Iannarino said the average entry-level wage for warehouse workers in Columbus is a little over $10 per hour. “It was stuck between $8 and $9 from the mid-1990s until a few years ago,” he said. “There was a lot of built-up wage pressure in light industrial, particularly in retail distribution operations.”

In a survey of 1,000 temporary workers conducted in Q1, Solutions Staffing found the four biggest criteria for workers in selecting a place of employment were, in order, pay rate, the potential for full-time hiring, available shifts and work location.

“The biggest shift we saw was, in the 2014 survey, the potential for full-time hire was the fourth most important criteria – now it’s the second,” Iannarino said. “Companies are being creative, making sure employees know there’s a potential path to full-time employment. And those that do tend to do better right now (in filling open positions).”

He also said as of three or four years ago, the push to hire seasonal workers has been starting earlier in the year, now happening often in August instead of September.

“In the last two or three months, every place I’ve been, including Detroit, Boston, Winston-Salem, Dayton and Dallas, everyone is having a hard time finding individuals willing to do (distribution center) work, even at a higher wage,” said Brian Barry, a senior consultant with F. Curtis Barry & Co. “You typically might see starting pay of as much as $12-$13 per hour, but even at that you can’t get enough of them to do the work that’s required and stick around. It becomes a very costly process, when you think about recruiting, training and retention.”

To illustrate, Barry said a company might hire 10 warehouse employees to retain one who sticks around, at an onboarding cost of $100 per worker. “So it costs them about $1,000 to get that one person they keep,” he said.

Barry agreed with Iannarino that providing a path to full-time employment is a great hiring incentive for retail and ecommerce operations. He said one client of his has seen success in meeting staffing needs by putting together a career path for new hires, outlining exactly how they can move up in pay, position and responsibilities.

“It outlines disciplinary actions, the skills needed, giving them the ability to know they don’t have to be stuck where they are forever,” he said. “They’re given incentive and initiative to do better and improve their pay.”

Natalie Woodward, a Senior Business Partner in Human Resources for eyewear retailer Luxottica, said she has seen demand for the right talent increase in the last year or two.
She said Luxottica’s peak season is at the end of the year, but driven more by employees tapping use-it-or-lose-it flexible spending accounts than the holidays.

“It’s more difficult to get the right caliber candidate,” Woodward said. “We want them to stay with us and not be someone who leaves quickly or has policy violations or instability issues. So if we want the right caliber candidate, we have to pay for them.”

From her perspective, Woodward said the problem doesn’t lie as much in labor demand as it does in providing attractive benefits and pay for retaining the top talent, “especially in the manufacturing and customer service field, which is our primary focus.”

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.