National Minimum Wage Increases Will Impact Distribution Center Logistics Costs

May 12, 2016 – by Brad Struck, SIOR, President of Industrial Services

Rising minimum wages in cities and states around the country could have a negative impact on labor costs relative to distribution centers, e-commerce fulfillment centers and industrial building tenants.

The cities in the map above have already approved increases in the minimum wage beyond the federal minimum of 7.25 an hour, and eleven states are in the process of raising the minimum wage above $10 by 2022. Each $1 increase in average hourly wages equates to $1 million in costs to a warehouse with a staff of at least 500 workers.  The increased costs have a direct impact on the bottom line and many times are not budgeted.  On average, a warehouse worker in the U.S. earns nearly $12 per hour.

Now is the time to begin analyzing current and future wage rates. The rising rates will influence renewal and new site location strategies.   

E Smith specializes in distribution site selection with regards to real estate, labor, transportation and incentives.  E Smith has an internal labor analytics team that can predict warehouse labor availability, sustainability, and cost (including peak). For more information and assistance with distribution site selection, contact Brad Struck, president of industrial services.