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Holiday Worker Shortage Creating Challenges for Big Retailers

11/03/2015

Larger retailers and delivery companies expect to face major challenges in finding enough workers for the upcoming holiday season. In addition, low unemployment coupled with the boom in e-commerce will likely force an increase in starting wages for hired workers.

Big retailers, including Amazon.com, Target, and Wal-Mart, have expanded distribution centers and warehouses around the country over the past two years in an effort to get customers their orders quicker. However, for this year’s holiday season, this building spree might backfire.

Low Unemployment Rate

Currently, the unemployment rate in the U.S. is at a seven-year low. With the holiday season fast approaching, many companies are having a hard time finding enough workers to keep those new facilities in operation. In addition to logistics companies and retailers, delivery companies, such as FedEx and the United Parcel Service, are struggling.

Even employment agencies that typically provide a large number of seasonal workers are having trouble finding enough people to work in warehouses. Since these jobs involve stocking inventory for the holiday shopping rush, this is a problem. The other area experiencing shortages is the order fulfillment centers responsible for packing and shipping merchandise.

No one expected the unemployment rate to drop last month to just 5.1 percent, especially with extensive growth in e-commerce. Because of this, delivery companies and retailers will probably need to offer higher starting wages in order to get enough qualified seasonal workers hired.

Even riskier are orders placed online by last-minute shoppers. For the past two holiday seasons, Amazon, as well as other online retailers, bogged up systems by trying to ship too many last-minute packages.

Tough 2015 Holiday Season

This challenge was first felt last year; for 2015, experts believe things will be even worse. As stated by Craig Rowley, retail practice leader with the Hay Group, which provides HR services, the low unemployment rate coupled with a healthy shopping season is going to make this a tough year.

To prevent a major problem, a number of retailers have already started hiring workers for the holiday season. In addition, retailers are going out of their way to find flexible solutions for employees who are restricted to certain shifts or limited as to the number of hours worked.

Wages for holiday workers have remained stagnant for years. This year, instead of making between $9 and $11 on average, companies are trying to lure in workers by offering between $11 and $13.50 per hour. In fact, in some regions of the country, including hubs for FedEx and UPS, starting wages will likely be higher.

Bryan McHugh, corporate director of UPS HR operations, said the company feels the crunch from various economic effects but is 100 percent confident it will have adequate seasonal help to get packages to their destinations on time. While UPS plans to hire 95,000 workers, Amazon’s plans are still unknown.

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