In a Tight Warehouse Labor Market, Is it Time to Re-evaluate Employee Pay?

Part II – Reevaluating Warehouse Employee Pay and Its Impact on Employee Turnover

Employee turnover in warehouse jobs is caused by numerous factors. While it’s true that many companies highly value, compensate, and incent their warehouse employees, not all do. The top reasons warehouse employees cite for leaving are low pay, minimal paid time off, the monotony of repetitive tasks, and mandatory overtime.

Add to this list frustrating working conditions such as slow warehouse systems, poor training, incorrect inventory information/levels, poorly maintained equipment, dangerous environments, unattainable work standards, cliquish cultures, and poor or adversarial supervision. In addition, for workers with young children, a key question becomes the cost-benefit of working versus the high cost of childcare.

These issues did not begin with COVID.

Starting in the ’80s and ’90s, there seems to be a progressive reevaluation/repricing of valuable employees in industries that can’t simply eliminate “People” in their operations. Those industries that require people for problem and task solving need to value their best workers or risk losing these people and their skills to competitors.

A company’s ability to recognize and address these issues determines its success or failure in recruiting and retaining quality staff and dependable talent. The place to begin is with the #1 culprit, poor/non-competitive pay.

What Does Warehouse Staff Pay Really Look Like?

With a shrinking talent pool, is it time to review the pay and benefits you’re offering to current and new employees? As a first step, re-assess the hourly pay ranges currently being offered to warehouse staff in your area. This is particularly crucial for those who may have limited knowledge of what their warehouse staff is actually earning.

Typically, warehouse jobs pay between $10 to $20 per hour. (In most larger cities, $15 to $18 plus is the norm). After taxes, insurance (if offered), 401-k (if offered), the take-home pay amounts to $425 to $550 per week.

More than once, I have heard managers say, “Why would she leave here for a $1/hour increase in pay?” Consider this….

As a percentage of their annual earnings, a $1 per hour raise for a $15 per hour employee is equal to a $6,600 raise for someone making $100,000. But it likely has a far more profound effect on the $15 per hour person’s basic income needs due to their far lower amount of discretionary income.

The Cost of Replacing Lost Employees

The question to ask is – How will any increased cost affect us, and will it cost us more time and money to find and train replacement employees and hope they succeed in a position that was already effectively filled, versus paying an additional dollar or two per hour more to keep quality talent?

Please note, no statement made here is intended to be social in nature. These are business questions and suggestions to think about to run a smoother and more efficient operation. If you’d like to see future posts on this and other logistics topics, please follow me on LinkedIn or contact me via email at rwilliams@creativelogistics.com.

Rick Williams, president and CEO of CLS, is a logistics expert with 40 years of experience in providing parcel shipping software and supply chain operations and technology solutions that drive improvement. CLS helps companies increase fulfillment productivity by combining streamlined workflows with multi-carrier shipping software, integrated pack/ship stations, data collection, and more.