Warehouse Labor Trends in 2023: Seismic Changes, Shortages, Retention Challenges & More
If you’ve had difficulty filling open positions in your warehouse, distribution center, or order fulfillment operation lately, you’re far from alone. The industry was dealing with a labor shortage all the way back in 2018—before anyone even heard of COVID-19. The pandemic and subsequent lockdowns and social distancing requirements only served to exacerbate these trends and challenges further.
Are you struggling with rising labor costs or unable to fill open positions? We’ll help you understand which automation options will provide the biggest ROI and labor savings.
Below is a look at some of the most pressing warehouse labor trends and challenges of 2022, and some advice you can use to free your operation from these constraints in the future.
Warehouse Labor Challenges in 2023
1. The labor market is suppressed.
Even before the pandemic forced vast segments of the economy to shutdown back in 2020, many order fulfillment operations were finding it difficult to find and retain workers. The reasons for this were varied, but included a historically low unemployment rate and fewer people looking for work, and an aging workforce (particularly in the order fulfillment industry).
The pandemic only suppressed the labor market further. First, there is the fact that many people, especially in the early months of the pandemic, simply didn’t want to go to work in crowded warehouses where they risked contracting the illness. Then, as the federal government passed multiple rounds of stimulus, including higher unemployment payments, many more individuals who otherwise may have returned to work were incentivized not to.
2. More competition makes it harder to attract the workers that are looking for jobs.
Even before the pandemic, more and more businesses were expanding into ecommerce. The pandemic only quickened the transition. Now there are far more organizations in fulfillment and distribution, which is draining the labor pool. This leads to a number of effects:
Higher wages
In order to compete with federal stimulus (mentioned above), many large businesses have found it necessary to pay higher wages. This has a ripple effect on the entire labor pool, forcing mid-sized and smaller operations to also raise their pay or else risk not being able to attract workers. The end result is a greater investment in labor costs.
In addition to the 9.3 million job openings, various economic indicators strongly support the idea that there aren’t enough workers in the United States:
- The average hourly wage for private non-farm workers rose $0.20 in April, $0.13 in May and $0.10 in June.
- In March 2021, the reservation wage for workers without a college degree rose by 26% year over year.
- The number of people voluntarily leaving their jobs rose by 164,000 to 942,000 in June 2021.
Faster turnover
As businesses continue to try and one-up each other on pay, sign-up bonuses, incentives and other benefits, it’s leading to higher turnover. This means you might spend two weeks training someone, only to have them jump ship and leave. That’s two weeks of wasted time where you were likely receiving very little value out of your trainee, who then goes to the competition down the street.
Poor customer satisfaction
Operations struggling to maintain a steady workforce of trained, full-time staff often find themselves relying on temporary workers and overtime for existing employees. While temporary workers are better than nothing, they are often more expensive, and less well-trained than regular employees would be. This often leads to increased errors, worsened accuracy, slower fulfillment times, and other issues that can worsen your customer’s experience.
3. It’s only going to get worse.
While things are bad right now, it’s only expected to get worse in the near term as more and more businesses reopen and vie for a share of the same limited labor pool.
In addition to increased competition draining the labor force, you also need to consider the fact that many people spent their lockdown days reskilling or otherwise gaining additional skills in order to change careers. This means even fewer people are willing to do the work of order fulfillment.
Dealing With Your Labor Challenges
Whether you are currently finding it difficult to maintain a steady and reliable workforce or you are anticipating a future where that is the case, the good news is that there are steps you can take now to free yourself from the constraints of a limited labor pool. Investing in automation and technology will allow you to put your existing labor force to use more effectively, lowering your dependence on temporary workers and decreasing your overall labor costs.
Of course, there are many potential options that you might consider, from AS/RS to sortation to AMRs, robotics, and even a software upgrade. Which solution makes the most sense for you will depend on your unique needs, and especially on the tasks you are hoping to automate (or augment) with technology.
That being said, the solution you choose should be the one that checks off most of the boxes below, while still meeting your needs:
- It should reduce labor and increase throughput
- It should be flexible and agile for change & growth
- It should be an intuitive system that reduces training needs
- It should provide improved ergonomics to reduce stress on workers
- It should should provide high levels of reliability (eliminating single point of failure)
- It should provide a 99.9% accuracy rate
- It should reduce the required floorspace to optimize new or existing facilities
- It should be simple to maintain and not require high levels of training, certifications, and floorspace for workbenches and spare parts
A trusted systems integrator can help you understand your options and build the optimal system for your needs. Contact us today to schedule a consultation with a member of the Conveyco Team.
