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Category: Distribution and Materials Handling

Supply Chain News: Continued Growth in US Distribution Center Space Drives Demand for Still more Workers



Many New DC Associates coming from Retail, other Sectors

Aug. 25, 2021
SCDigest Editorial Staff

Driven by ecommerce and an overall healthy economy, demand for distribution center workers continues to grow in most markets, straining the ability of companies to attract and retain DC associates.

Supply Chain Digest Says...

Newmark notes that while investments in automation are shifting the nature of distribution center employment by increasing worker productivity, “overall demand for labor will continue to grow.

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A major driver of that increasing demand is the continued development of new distribution centers. Each new facility creates demand for dozens, hundreds or in Amazon’s case even thousands of new associates, in a fiercely tight labor market, especially in major distribution hub markets such as Los Angeles, Chicago, Atlanta and a number of others.

Recent analysis from industrial real estate firm Newmark found that in the second quarter of this year there was a record 423.7 million square feet of industrial space under construction across the US, most of that for distribution.

Newmark estimates that as this space is completed and occupied, a whopping 282,470 additional workers will be needed to support activities within those facilities when opened.

That is a substantial amount of workers.

Newmark says that meeting that labor demand is being made possible by attracting workers from retail and admin type jobs, attracted by higher and faster rising wages. Amazon of course set a $15.00 per hour minimum wage a couple of years back, but actually pays somewhat more than that in many locations, with good benefits that start on day 1 on the job.

A chart from Newmark shows that the number of workers by year moving into warehouse and transportation jobs from other industries, which reached 960,000 in 2020 and was at 400,000 for the first half of this year.





Source: Newmark

(See More Below)




“Exploring concentrations of workers in industries other than warehousing and transportation with analogous barriers to entry and job contexts is key” to finding enough new DC workers, Newmark observes.

The firm also says that “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.” It adds that more investment in public transportations is needed to address this mismatch.

Finally, Newmark notes that while investments in automation are shifting the nature of distribution center employment by increasing worker productivity, “overall demand for labor will continue to grow and be a top concern for stakeholders across the industrial sector.”

Oddly, given the clear labor shortage, Newmark finds high unemployment rates among distribution workers, including 9.0% in the Dallas market, 13.2% in Chicago, and 10,4% in Seattle.

SCDigest has no idea how to explain that.

What do you think of the growing demand for DC worker? Let us know your thoughts at the Feedback section below.




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