An additional 282,470 workers could be needed by Q2 2021.

MH&L Staff

AUG 05, 2021

Greater demand for warehouse space stemming from a structural shift in supply chain dynamics has led to a highly competitive labor environment in many markets, which COVID-19 has exacerbated. In 2Q 2021, a record 423.7 million square feet of industrial space was under construction across the U.S. This is according to a recent report from Newmark.

As this space is completed and occupied, an estimated 282,470 additional workers could be needed to support activities within these facilities. Increasingly, employees in other industries are switching jobs to work within the warehousing/transportation (W/T) sector.

Approximately half of employees making this change previously worked in the retail/wholesale and administrative/support services, and this flow is likely to accelerate. Recent national wage growth in those sectors lagged gains in W/T wages, which grew by 4.25% from January to June 2021, a record 6-month gain for the sector.

Additionally, COVID-19 has had a significant impact on industry demand shifts and the subsequent reallocation of labor across sectors, illustrated in part by the widespread, temporary closure of non-essential retail while e-commerce activity soared. Retail re-hiring needs are difficult to forecast, but some of this labor reallocation to W/T is likely to remain permanent.

W/T employment has nearly recovered from pandemic-related losses, but with strong, continuing industrial expansion, labor attraction and retention often require a combination of strategies and considerations.

Exploring concentrations of workers in industries other than W/T with analogous barriers to entry and job contexts is key.

Other considerations include W/T unemployment, and re-engaging employees who previously left the sector due to wage and benefit levels, working conditions, or COVID-related health concerns.

Often overlooked is the availability of public transit to warehouse districts. The physical separation of worker residences from warehouse districts places real limitations on recruitment. Communities, developers, and businesses all have an opportunity to leverage a shift in employment by partnering on public/mass transit opportunities, which are more environmentally conscious, reduce the impact on public infrastructure, and create access to jobs with upward mobility in the wage stack.

While investments in automation are shifting the nature of W/T employment by increasing worker productivity, overall demand for labor will continue to grow and be a top concern for stakeholders across the industrial sector.