This Year in Labor: 2022 The Labor Crunch

The Year in Labor is nGROUP’s look at the world of labor-intensive operations in 2022. We’ll look at what happened this year, why it happened, and what we might see as a result in 2023.

Say what you will about the warehouse labor market in 2022, but it has been anything but boring.

The drama that played out around the globe and on main streets everywhere kept policymakers, analysts, and employers riveted, and anxious to see what happened next.

The star hogging the spotlight? The labor crunch.

An unwelcome first

2022 has been a boon for job seekers.

The economy added jobs at an impressive rate throughout the year. By September, the number of job openings in the U.S. exceeded the number of unemployed workers for the first time in history. 

In the same month, the transportation and warehousing sector claimed the third-highest spot in job creation (+111,000).

Also, the average hourly earnings for workers in the sector edged up by 3.2 percent––beating hourly worker earnings increases in all other private sectors.

Not that no one saw this coming.

Despite rumors of recession, persistent demand for e-commerce and shipping services continues to drive strong growth in the sector.

In a “normal” economy, all of this would be accompanied by popping corks and clinking glasses. But in 2022, employers short on warehouse workers had little cause to celebrate. 

Especially since these “good” trends didn’t bring waves of new job seekers into the picture.

Analysis predicting the labor crunch would persist didn’t help either.

Estimates included 330,000 fewer truck drivers through 2024 and a shortage of 85.2 million skilled workers by 2030, with a projected economic loss of $8.45 trillion.

Wages, perks, and robots 

So employers adapted. Wage boosts, perks, and incentives proliferated as employers sought to fill workforce gaps in the short term. In some cases, we saw up to $5,000 offered as a signing bonus.

Some employers got more creative. They attracted new kinds of workers, including workers typically overlooked in previous years. They implemented gig-work models to attract employees with the promise of greater schedule flexibility. Some even added amenities like gyms and fine dining.

For other employers, the labor crunch accelerated investments in automation. So much so that in March, analysts predicted the food automation market alone would grow at a compound annual growth (CAGR) rate of 9.5% through 2027 to reach $29.4 billion.

Of course, 2022 would not be complete with a healthy dose of irony. Employers that invested in automation to close the labor gap found themselves more attractive places to work

But not all warehouse workers are welcoming automation with open arms. In November, Amazon unveiled Sparrow––a robot that can recognize and pick 65% of the items the company sells. Some of the e-tail giant’s warehouse workers are convinced it will take their jobs. But Amazon insists it will create new jobs and make their warehouses safer.

The World Economic Forum agrees. It predicted that automation will result in a net increase of 58 million jobs and enable employees to gain more advanced skill sets.

What can we expect next?

The warehouse labor crunch’s time in the spotlight isn’t quite over, but there are signs it won’t hog the stage for much longer.

As layoffs continue to spread and consumers tighten their belts, job seekers are expected to find their leverage weakened as the number of job openings recedes. At a recent conference, attendees who had been struggling to find workers told us they now have people lining up for their jobs.

So we expect wages to remain high in the short term, but incentives like signing bonuses to wane. One of our largest clients recently ended its 90-day incentive program. We think more will follow suit soon.

As for automation, we think there are good reasons to believe its impacts on labor availability will be mixed, if not counterintuitive.

If predictions that robots will create more jobs than they kill are correct, they could spark their own kind of labor crunch. Especially as the skills required to manage and work alongside the systems become more sophisticated. In the coming years, expect fierce competition for workers mastering automation skills now and as it evolves.

In other words, don’t expect them to come cheap or to be retained easily.

Of course, predictions are a risky business these days. But whatever happens, we think chances are good the next act will be just as riveting as the last.

How can we help you be ready for the next act in 2023?

nGROUP helps labor-intensive operations run a more cost-effective and productive workforce. How? Through our performance-based model that incentivizes results.  We offer both insourcing and outsourced third party logistics (3PL) so you can have the flexible, expert support you need to hit your targets.

We help you find enough great people so your shifts are always full. We provide on-site management to relieve your team and guide those teams to maximize their production, while keeping costs low. We use in-house technology to provide visibility into the inner workings of your operation, giving you the information you need to discover more efficiency.

If logistics and/or labor management headaches are holding you back — give us a call today. We help retail distribution, wholesale distribution, reverse logistics, fresh food production, and light manufacturing operations gain an edge through a more cost-effective, productive labor force and logistics operation. Don’t let new or old logistics and/or labor headaches compromise your ability to compete. Call nGROUP today and win in 2023.

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