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Labor shortage could delay your online orders

The unemployment rate continued its descent in August, falling to its lowest level since April 2008.

But while the steadily improving jobs picture is no doubt a boon for consumers' bank accounts—and, as a result, retail sales—labor experts warn that a tightening job market may add a new wrinkle to retailers' holiday hiring plans.

As online sales growth continues to outpace that at physical shops, experts say retailers are already having trouble filling positions in the heart of their digital operations—their warehouses.

A continuation of this trend could be particularly troublesome for companies during the peak shipping days of the winter holiday season, when distribution centers often require two to five times the staffing, said Frank Layo, a partner at supply chain consulting firm Kurt Salmon.

"It's really become a major supply-chain risk," he said.

A worker at apparel distributor Beverly Rose searches through inventory to fill an order at the firm's warehouse in Miami.
Mark Elias | Bloomberg | Getty Images
A worker at apparel distributor Beverly Rose searches through inventory to fill an order at the firm's warehouse in Miami.

According to Monster.com, job postings in the logistics industry begin to surge in October, as companies start training workers ahead of the holiday season. Layo predicts certain retailers will need to hire 15 to 20 percent more warehouse workers this Christmas season to account for their 30 percent online sales growth.

He's concerned, however, that there may not be enough bodies to fill those roles. Over the past week or two, he said, he's heard from about two dozen retailers with nationwide distribution that they're having a tough time filling jobs in their warehouses.

Recent research from Staffing Industry Analysts, a global advisor on contingent labor, finds that the issue may not be limited to warehouses, but extend to all temporary jobs created for the holiday season.

Through a monthly survey the research firm issues to temporary staffing firms, it found in July that temporary roles have been harder to fill across all industries. This trend was even more pronounced in the industrial segment, which covers warehouse jobs, the firm found.

Meanwhile, internal job growth at direct hiring agencies, which help people find permanent work, is increasing five times as fast as hiring across the overall economy, according to Jon Osborne, Staffing Industry Analysts vice president of strategic research.

"These agencies themselves are hiring like mad," Osborne said. "It's no longer the case where there's a huge amount of surplus labor sitting around doing nothing."

Aside from a desire for full-time work, a few other underlying trends could be contributing to a dwindling interest in warehouse work. For one, jobs at fulfillment centers are more labor-intensive than other part-time gigs, as packing boxes requires attention to detail, Layo said.

Traditionally, workers have been compensated for their efforts by receiving a higher average hourly rate than in-store workers. But as the minimum-wage debate surges across the U.S., retailers are under more pressure to raise pay at the store level, which are typically considered the more desirable jobs.

What's more, new job opportunities created by companies like Uber offer workers more flexibility, Layo said.

"There are only so many people who are willing to work in a warehouse environment," he said.

Osborne added that with distribution centers culling hundreds or 1,000-plus workers from any local market, "you may find at some point you've tapped out the number of people who are willing to do it."

For its part, Target said it hasn't experienced staffing issues in its warehouses. And Wal-Mart—which has opened two 1.2-million-square-foot distribution centers over the past month and a half—said it hasn't had trouble filling the roughly 300 and 400 jobs at each of these facilities.

Spokesman Ravi Jariwala attributed its success to the fact that the centers are near other Wal-Mart locations, allowing them to pull from an existing pool of workers. He added that the pay rate in its fulfillment centers generally is slightly higher than in its stores in the area.

"That is very attractive to potential associates who are interested in … that part of our business," Jariwala said.

Although other retailers may be having trouble filling roles at their warehouses, John Challenger, CEO of outplacement firm Challenger, Gray & Christmas, said the problems are not acute enough to warrant a shift away from the trend toward a part-time economy.

"Most employers are very wary about filling their stores and warehouses with people when there's nothing for them to do," he said. "They don't take that kind of financial risk anymore."

Although there has been a higher rate of layoffs in the overall retail sector, it may become difficult to find temporary workers—both in stores and at fulfillment centers—as the unemployment rate continues to fall, Challenger said.

On Thursday, his firm reported that the retail sector planned 9,601 layoffs in the month of August, and announced 57,363 job cuts this year. That's a 90 percent increase over the same time frame last year—though Challenger said it is not indicative of the overall health of the industry.

"We have seen some big layoffs this year, particularly from long-time players that simply have not been able to keep up with changing consumer trends," he said.

Challenger, Gray & Christmas will release its annual holiday hiring survey later this month.