Rising warehouse wages are driving up demand for technology and automation to reduce labor costs, according to a study from the Nevada-based third party logistics provider (3PL) ITS Logistics.
“Wages have increased to a regional average of $18.99, which is around a 40-50 percent increase in the last five years. It was not long ago that a starting warehouse employee made $12 to $14 per hour on the high end,” said Ryan Martin, President of Assets for ITS Logistics. "As increasing wages put pressure on employers, the demand for technology and automation to reduce labor costs in warehouse operations is also increasing.”
But at the same time that wages are rising in response to historically low unemployment rates, the tight market for industrial real estate has been loosening up in recent months, ITS said in its “Q2 ITS Logistics US Distribution and Fulfillment Index, Powered by Cresa.”
The National Industrial Real Estate Vacancy Rate for the second quarter of 2024 eclipsed 6.2%, which is up from 5.7% in Q1. There is also more warehouse space available on the market right now than at any time since the 2020 onset of the pandemic, the report found.
While warehouse automation continues to evolve to fit those conditions, rising wages indicate employers are competing for talent in specific regions due to inflationary pressures. Federal and state incentives are also driving manufacturing to key areas, increasing competition for higher-paying jobs and pressuring general warehouse positions to rise apace, ITS said.
As inflation continues to droop and nearly touch the Fed’s target rate of 2%, consumer spending is currently supporting underlying momentum in the nation’s markets, as shoppers show continued confidence in the economy, the report found.
“The Consumer Sentiment is currently up 28.1% from March 2023 and up 13.92% from December 2023,” Martin said. “This is a highly encouraging indicator for businesses. Overall, retail sales were also up 0.7% in March, seasonally adjusted from February, and up 4% unadjusted year over year. This growth includes services but is also directly impacting retailers in a positive manner.”
