Rising cost of warehouse labor

[Perry Trunick]

The US Congress is working on a bill that would raise the minimum wage over the next few years. Other than temporary or seasonal workers, most warehouses are likely already paying above minimum wage to attract workers.

If the minimum-wage legislation passes, will the increase make it more difficult to attract warehouse workers and material handlers? Or will it trigger wage inflation and/or a shortage of warehouse labor?

[dpratt]

I can't speak for the industry as a whole, but raising the minimum wage will not directly affect the company I work for. Our non-union wages are competitive for our geographic region. In fact, turnover is <1% and the average tenure is 12-15 years. I'm positive that our wages are driving forces behind these statistics, particularly since many of our employees drive 30+ miles to get here despite the cost of fuel.

Keep in mind that I work for a manufacturer, not a warehouse. The downside is that I get to deal with increases in equipment and volume with no increase in material handling capacity.

[Oklahoma Jeff]

As dp led to, warehouse operations should already be considerably above minimum wage. I don't believe raising the min wage will affect the warehouse community. At least not the 50,000 sq foot and above catagory. Some small operators may have issues, but if you are putting a man on a standup gas or electric fork lift, even a power pallet jack, he better be certified and a certified operator should easily be making better than min. If he is certified and making that little, he must be working for family.

[ILM]

What is interesting to watch is how the cost of goods nationwide seems to always take the same incremental bump to reflect the min. wage adjustment. Here in the DFW area, min. wage earners make up a good portion of the economy due to the influx in immigrant labor and therefore driving down the wages of skilled trade laborers. All in all I don't think the min. wage plays a large roll in our day-to-day dealings, but as a consumer, I think we feel it.

[jackmerritt]

The biggest problem with an increase in minimum wage is compression. Someone who has worked two years has increased their hourly salary by 20% they are satisfied until they see that new employees are now earning close to what they are earning. Plant managers are helpless because the only way to truly fix this problem is to raise all employees’ salaries by the same percentage as new employees. In my 35 years in the business I have never seen that happen. The second part of this problem is the comparison of skilled workers' salaries to unskilled worker's salaries even when the workers are employed in different plants. After a large minimum wage increase, the skilled workers often feel like they are underpaid.

So adding labor unrest (lower productivity) to higher energy prices and uncontrollable insurance costs means more jobs exported to countries where hourly salaries are a small fraction of ours or the cancellation of many jobs altogether. This will translate to a large increase in unemployment accomplishing the exact opposite of the lawmakers intent.