The 2021 Material Handling Labor Update: Current Challenges and Future Predictions
If you are struggling to fill roles in your warehouse, distribution center or order fulfillment operation with qualified workers, you are NOT alone. Even without COVID-19 complicating the situation, it’s no secret that the material handling industry has been experiencing a labor shortage for the past two years. Now the industry is dealing with a global pandemic and the lockdowns and social distancing — amplifying the effects of the labor shortage to near catastrophic levels.
This article offers a summary of the biggest labor challenges of 2021 and where we think the Labor Market is trending for the remainder of the year. In a future article, we will cover some ways the experts at Carter think your operation can cope with these labor challenges.
The Current Labor Market is Crippled
In the months leading up to the pandemic — well before economic segments began shutting down in 2020 — available labor was at an all-time low and companies were finding it difficult to get workers on the floor. This is mainly because of a lack of people looking for new jobs, low unemployment rates and an overall aging workforce (especially for warehousing). After the pandemic hit, things only got worse. Workers did not want to go back to work and risk contracting the virus, especially in a crowded warehouse. Government incentives such as stimulus checks and unemployment benefits reinforced this trend, so individuals who may have otherwise been forced to risk contracting an illness could survive without having to go back into the warehouse, making it even harder to fill warehouse roles.
Companies Need to Offer Higher Wages to Compete
Because of the shortage in labor and increased government assistance, companies have had to react with higher wages to compete. Small to mid-sized operations have been forced to invest more in labor costs to deal with this increased expectation for the labor pool. If they choose not to raise wages, they risk being unable to find qualified labor or any labor at all. Like any increase in cost, companies have been slow to raise wages to match the new market, leaving warehouse roles open for long periods of time.
Turnover Rates are Sky High and only Rising
All the labor competition around the warehousing industry has led to a frenzy of hiring and talent acquisition expansion — something we’ve experienced personally at Carter Intralogistics. Companies are constantly looking to one-up each other for worker benefits, like wages, sign-on bonuses and more. All this is leading to an increase in turnover rates as workers hop from company to company finding the best opportunity for themselves, increasing training and onboarding costs exponentially. Constantly bringing in new workers inevitably leads to more errors, lower accuracy, slower fulfillment times and can have a profound impact on bottom lines. It’s a vicious cycle.
We Anticipate the Labor Shortage Will Only Get Worse.
Things are rough right now, and that might even be an understatement. Unfortunately, it’s only supposed to worsen in the short term as more and more businesses open their operations back up and start competing for workers from the already very strained labor pool. In addition to that the increased competition rapidly draining the labor pool, many people have used lockdown to re-skill, gaining additional skills for potential career changes.
Carter Can Help.
There are a lot of ways you can deal with labor shortages in warehouses, distribution centers and order fulfillment operations, including: Robotics, Automated Order Fulfillment, smarter Conveyance Technologies and more.
If you’re interested in learning about these solutions, click here to contact us.
Otherwise, stay tuned next for our upcoming article, “The 2021 Warehouse Labor Update: Addressing Your Labor Challenges” where we will go into detail about these solutions and offer our recommendations for how you can deal with this inopportune Labor Market.