How Minimum Wage Increases Affect The Logistics Industry

Just this month, Walmart’s CEO called on Congress to boost the national minimum wage. At the company’s annual meeting, Doug McMillan called the current $7.25 minimum wage “too low,” and said it’s time for Congress to enact some legislation to boost it.

Walmart is one of the most significant supply chain companies in the US. While retail jobs at the company start at around $11 an hour, logistics jobs at Walmart start at roughly $12 an hour, and according to Glassdoor, go up to about $23 an hour. The current minimum wage in Arkansas, home of Walmart headquarters, is $9.25 an hour. That figure is expected to climb to $11 by 2021, with increases occurring incrementally.

Supply chain giant Amazon has warehouses all across the US, including Missouri, where the minimum wage is set to rise to $12 an hour by 2023.

The Effects Of A Minimum Wage Increase

A rising minimum wage will add to labor costs. And there will probably be further price increases from local suppliers as they’re also forced to raise their prices to account for higher labor costs. But there are benefits to getting ahead of an increase in the minimum wage. For one, employees who are paid well tend to stay at their jobs longer. In the long run, that cuts an employer’s cost because they do not have to hire new workers. (Replacing an employee who quits costs about 21% of his or her annual salary.) Higher wages can also serve as motivation to encourage employees to provide better customer service, which is also better for the bottom line. Establishing an exceptional, tenured team dedicated to your company’s vision is likely worth any extra you’ll have to pay in salary.

There’s no way to avoid the higher minimum wage. Even if it hasn’t increased yet in the state where you work, it’s bound to eventually. So the best thing you can do is prepare for it.

What Should Employers Do?

To attract and retain great employees, you’ll want to make sure you exceed whatever the law requires, even slightly. People who work in warehouses, for instance, have skills that are easily transferable to other companies. Right now there are more jobs open than there are experienced workers, so it’s wise to pay your staff well. Amazon decided at a corporate level to pay all US-based employees a minimum of $15 an hour. Doing this before a national mandate was passed helped establish Amazon as “the place to work.”

When you’re paying your workers more money, it’s fair to expect more out of them. Tracking their hours and output can help validate your team is putting in the work needed to make up for increased labor costs.

At Spectra360, we understand your business and speak your language. We’re a managed service provider for several of the nation’s larger logistics companies. We can build project teams to work as an extension of your business without the additional headache and costs associated with onboarding, retention, or potential offboarding. If you want our help managing your supply chain services, let’s talk!

About Spectra360

Spectra360 is one of the nation’s fastest-growing talent management agencies. We introduce talented individuals to logistics companies that are in need of their specific expertise to keep the business growing. We work on a Contract, Temp to Hire, Direct Hire, or Managed Services basis.

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