How E-Commerce Increases Demand for Labor

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April 25, 2017

e-commerce

With e-commerce driving industrial real estate demand nationwide, the need for warehouse labor has also increased dramatically.

From 2010 to 2014, e-commerce was the third most active industrial sector, accounting for 16.1 percent of all “big-box” transactions nationally, just behind traditional retail and consumer non-durables. However, over the last two years, not only has e-commerce become the most active sector with 22.5 percent of all big-box transactions, but the gap among the top three sectors as widened. As an additional sign of the times, traditional retail dropped to fourth.

Initially, the bulk of e-commerce leasing took place in major distribution hubs, such as Central Pennsylvania, Dallas-Fort Worth and the Inland Empire. Today, however, there is a growing shift to secondary markets like Indianapolis, St. Louis and Houston.

While central location is a major factor in the rise of other markets, so are e-fulfillment labor demand and wage factors. Despite extensive automation, the e-commerce industry’s impact on demand for labor has been magnified by its heavy employee counts and severe seasonal spikes as compared to non-fulfillment-driven operations. As a result, e-commerce leasing can drive local demand for labor at a rate two to three times that of traditional warehousing operations.

On average, industrial markets with elevated levels of e-commerce leasing activity have seen median wage rates for laborers and freight stock employees increase by 5.8 percent from 2013 to 2015; meanwhile, in the same areas wage growth for all occupations only increased by 2.7 percent. As the economy reaches full employment, wage growth is expected to increase as employers compete for qualified labor.

With “big-box” leasing around the country continuing to flourish and unemployment rates steadily reaching new lows, continued wage growth for warehouse associates is expected to outpace many other employment sectors, putting upward pressure on overall total landed costs.

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