It’s July 10, 2031, a typically hot day in Chattanooga, Tennessee. Inside an air-conditioned warehouse, an employee clocks out for lunch using an iPhone app, then leaves the comfortable warehouse floor in shoes custom-made for warehouse work. The worker mulls a stroll along a shaded path adjacent to the facility. However, the cafeteria beckons with an array of high-quality cuisine paid for by the employer. After lunch, the worker may catch a short snooze in the well-appointed break room, or get a quick massage from one of the on-staff therapists.
Sound too fanciful? Perhaps. But it seems a safe bet that as the decade rolls on, warehouse work will become a more pleasant experience than the gritty gig that it is today. Not necessarily out of the goodness of employers’ hearts, but out of cold dollars-and-sense calculations.
In a world that increasingly relies on e-commerce and the fulfillment services accompanying it, what will be needed to attract qualified employees and, perhaps more important, keep them from going to a rival for $1 more an hour in a seller’s market? The answer, as far as labor is concerned, may not be found in that additional dollar per hour, but in the ancillary benefits an employer makes available.
In 2021 and beyond, firms in the industrial sector must “focus on modern amenities” to keep qualified workers whose services are in demand more than ever, real estate and logistics services giant JLL Inc. (NYSE:JLL) said in a mid-February report.
Those amenities, JLL said, include clean, safe and well-lighted interiors; comfortable break rooms; attractive exterior landscapes; health and wellness support; and in high-growth, hot-weather regions like the Sun Belt, air conditioning. In its report, JLL said that U.S. industrial employees today have just an 8% chance of working in a building that’s air-conditioned.
Benefits such as a path of career advancement can be just as valuable, experts said. “On the career side, can employers effectively articulate” a future for their warehouse workers, asked Steven Hussain, vice president of workforce programs and community relations for Prologis Inc. (NYSE:PLD), the world’s largest developer and operator of logistics warehouses.
In 2018, Prologis launched an initiative with local workforce programs to provide mentorship, skills training, internships and job placement services for people interested in pursuing careers in logistics, distribution and transportation. (A Prologis unit is an investor in FreightWaves.)
Penny-wise and pound-foolish?
Employers concerned about the costs of providing such amenities — especially the expense of cooling a 1 million-square-foot facility — should consider the alternative, namely the consequences of higher worker turnover if rivals dangle more attractive carrots, according to Christian Beaudoin, JLL’s managing director, research and strategy.
Beyond the costs of replacing departed workers, there is the potential for service disruptions if a facility is short-staffed or populated with inexperienced replacements, Beaudoin said in a phone interview.
Then there is the risk of a public relations nightmare should an incident occur in a warehouse.
XPO Logistics Inc. (NYSE:XPO), with 890 warehouses in North America and Europe, confronted such an issue in October 2018 following The New York Times report that pregnant workers at a Memphis, Tennessee, facility that XPO had taken over from New Breed Logistics, which XPO acquired in 2014, were subjected to excessively demanding working conditions. The report also stated that supervisors ignored doctors’ written requests for the workers to be given less strenuous tasks, and that being on their feet all day carrying heavy shipments in a hot and humid facility led to miscarriages and one death. XPO, which disputed much of the Times story, said the incidents took place while the facility was controlled by New Breed.
Asked to comment for this story, Josephine Berisha, XPO’s chief human resources officer, said in a Wednesday e-mail that the company is “devoting resources to give our employees a work experience that adds value at every level.”
For example, automation advancements are focused on “intelligent innovations, like collaborative robots and wearables, that reduce the physical demands of logistics jobs,” Berisha said. “There’s a direct correlation between being an employer of choice around the globe, and being a logistics partner of choice for world-class companies.”
If firms are reluctant to provide additional benefits, a deep-pocketed gorilla in Seattle just may. According to one source, Amazon.com Inc. (NASDAQ:AMZN) provides air-conditioned warehouses and access to health and wellness services, among other perks. Amazon, which did not respond to a request to comment, certainly has the resources to offer the warehouse labor version of the moon and the stars.
Still, offering new perks to warehouse workers may not go down easily with operators still dealing with the reality that the low wages they were accustomed to paying have now surpassed $16 an hour on average — and soon could breach $20 an hour as the nation’s unemployment rate begins to recede and e-commerce demand continues to surge. While operators have been modeling the cost of additional perks, it will take months of adequate returns on investment to convince them it is money well spent, said Hussain.
DHL Supply Chain, the world’s largest contract logistics provider, is treading cautiously, In an emailed statement on Wednesday, Kelli Saunders, senior director, tax incentives and site selection, for the Deutsche Post DHL (OTCMKTS:DPSGY) unit, said that “we recognize our people are our most valuable asset” and that the company is “committed to investing in the recruitment and retention of quality employees.”
Low-end labor no more
Warehouse workers in America have long been treated as fungible labor, hired to perform the task at hand and not to build relationships with the operator. This attitude has manifested itself in working conditions that in many facilities are considered substandard.
By contrast, Hussain noted, European warehouse firms have made attractive work climates a priority, a reflection of more labor-friendly expectations embedded in the Continent’s business culture.
Some operators turned off by the idea of offering high-end amenities to purportedly low-end workers may opt for robotic investments. However, for all the talk of artificial intelligence, there are human capabilities that robots can’t replicate.
In addition, it would be cost-prohibitive to staff every facility with expensive automatons that need to be programmed, maintained and repaired, experts said. At this time, most discussions about warehouse robots have centered on robots collaborating with humans and taking some of the more repetitive tasks off their hands.
Savvy industrial employers are taking their cues from firms in the office and high-tech sectors, which have long lured valuable labor with appealing benefits, experts said.
“As tech companies know, the more benefits you provide, if the other compensation is good, the stickier your business is,” said Grant Langston, who came out of a short-lived retirement as CEO of online dating site eHarmony to head Los Angeles-based Warehouse Exchange, an on-demand warehouse provider.
Beaudoin of JLL added that the concept of perks to office workers met with considerable resistance in the 1990s but is now considered mainstream.
Free, high-quality food is at the top of workers’ amenities list, Langston said, and employers should make it available at least several days a week, if not daily. Flexible schedules — which have become more commonplace — would rank a close second, if not the top priority, Langston said. Health and wellness centers, and child care facilities would also be helpful, he said.
Another key benefit is access to transportation services so workers don’t have to drive an hour or more in each direction to get to work. Tech titans like Google Inc. (NASDAQ:GOOG) and Facebook Inc. (NYSE:FB) early on offered ride-sharing and shuttle services to employees commuting from long distances to the companies’ high-rent headquarters cities.
Not every perk, of course, is going to move the needle. After some of the core benefits, the value of amenities quickly drops off, Langston said.
“No one is going to take or leave a job because of a quiet room or a pool table,” he said.