The State of Labor in the Warehouse: Labor Day Edition

Every year, the United States sets aside the first Monday of September to celebrate Labor Day. While some view the holiday as the unofficial end of summer (and a great excuse to have a barbeque), the purpose of Labor Day is to honor the contributions of American workers.

The idea for a “working man’s holiday” started gaining traction in the late 1800s. At this time in history, the Industrial Revolution was in full swing with trade unions and labor movements becoming more prevalent in response to poor working conditions.

Advocating for more time off, labor unions proposed that a new holiday be created halfway between Independence Day and Thanksgiving, a day to honor the important contributions of the American workforce – Labor Day. The first Labor Day parade was held in New York City on September 5th, 1882, with 10,000 workers marching from City Hall to Union Square. Soon, the idea of a day to honor workers’ contributions began to spread across the country.

Oregon was the first state to declare Labor Day an official holiday in 1887, with several states following suit soon afterward. By the time President Grover Cleveland made Labor Day a national holiday seven years later, in 1894, 30 states had already passed legislation recognizing the holiday.

These days, few people understand the original intent behind Labor Day. Instead of celebrating the contributions of American workers, Labor Day is typically viewed as a chance to enjoy a 3-day weekend before chilly fall weather moves in. And, ironically enough, many businesses remain open on Labor Day, requiring their employees to work.

This is inevitable, of course –– the supply chain never sleeps. As we learned during the Covid-19 pandemic, there are many essential workers whose labor we simply can’t do without, including those who work in warehousing and logistics. So to honor the hardworking warehouse personnel this Labor Day, let’s take a look at the current state of labor in the warehousing industry.  

The Warehousing Industry by the Numbers 

To start off, let’s look at some key statistics about the warehousing industry and its workers. The number of warehouses in the U.S. has been steadily increasing since 2010, reaching an all-time high of 19,190 in 2020.

• There are 1,002,809 warehouse workers currently employed in the United States.

• The highest concentrations of warehouse workers can be found in Houston, Texas and Indianapolis, Indiana.

• 77% of warehouse employees are male while women make up 19% of the warehouse workforce.

• The average age of an employed warehouse employee is 39 years old.

• The most common ethnicity of warehouse employees is White (59.9%), followed by Hispanic or Latino (19.7%) and Black or African American (10.0%).

• The turnover rate for warehouse employees is high, with 42% staying at their job for less than a year.

• The average hourly wage for a warehouse employee is $15.47, which works out to an annual salary of $32,177.

• Warehouse employees’ average starting salary is $29,000.

• The highest annual salary for warehouse workers, which is $34,113, can be found in Dover, Delaware.

• There are currently 78,558 job openings for warehouse workers in the United States

How is the Industry Changing? 

The warehousing industry is in the midst of some major changes. The three biggest shifts currently taking place are:

Labor Shortages

Before the Covid-19 pandemic struck, the warehousing industry was already struggling to find enough people to fill all the available job openings. Since 2020, that gap has just continued to widen. This widening gap is fueled by two factors: an increased demand for goods, and a massive labor shortage.

The demand for goods went up significantly in 2020, with ecommerce orders increasing 44% over the prior year. At the same time, employees across the country were taking time during the pandemic to reconsider their work options, with many seeking flexible employment with the opportunity to work from home.

As we all know, working in a warehouse requires being on site – you can’t receive, inventory, manage, move, or ship goods from a remote location. So at a time when warehouse workers are in high demand, there are fewer people willing to take on the jobs.

This labor shortage isn’t unique to the warehousing industry, however. Businesses across the country, especially in the hospitality industry, are faced with the same set of challenges. In an attempt to attract more employees (and better compete with other companies for a limited talent pool), many companies are offering incentives like sign-on bonuses, higher wages, and even iPhones.

Unionization

In addition to being short staffed, warehouses are facing another potential change in their operations: unionization. Efforts to unionize at an Amazon warehouse in Alabama have so far been unsuccessful, but with the National Labor Relations Board recommending another vote due to company interference, that could soon change.

If workers in Amazon warehouses unionize, this could have a major impact on the entire industry. Amazon is currently the second highest private employer in the United States, behind Walmart. Unionization at Amazon would likely have far-reaching effects leading to additional unionizing efforts in warehouses and distribution centers across the country.

Automation

Automation is creating significant changes in the way warehouse work is done. New innovations like robotics and augmented technology are redefining the traditional warehouse.

For example, there’s no longer a need to rely only on human labor to carry out repetitive tasks like tracking, sorting, counting, and picking; they can be conducted through automation instead or a combination of humans and machines. This helps operations run more smoothly, efficiently, and accurately while freeing up personnel to focus on other responsibilities.

Software and hardware enhancements are also creating a higher standard of productivity and accuracy. Providing workers with cutting-edge wearable technology like scanners, tablets, and smart glasses significantly increases speed, decreases errors, and reduces overall labor costs.

What Does This Mean for 2021 and Beyond? 

Tracking all of these changes gives us a clearer picture of what’s in store for the warehousing industry this year and beyond. With workers in high demand across a number of industries, companies will have to raise wages and offer additional benefits like education reimbursement, opportunities for upward mobility, and increased paid time off to attract the warehouse labor they need.

At the same time, warehouse personnel will continue to fight for better working conditions. If they’re unable to find them at their current employer, they’ll leave and deliberately seek out companies offering a work environment that’s safer and more enjoyable. If businesses do not embrace the technology that can improve work conditions, they won't rate highly with employees and will constantly struggle to fill positions.