Opening of Amazon Warehouse to Ratchet Up Competition for Workers – Oswego County Business Magazine

With the online retailer expected to hire 1,000-1,500 workers for its CNY fulfillment center, experts say companies will have to raise wages and find other ways to attract workers of their own

By Ken Sturtz

As general manager of the sprawling Dot Foods distribution center in Clay, Adam Smith knows firsthand how tight the labor market is. He’s trying to fill openings for warehouse workers, truck drivers and administrative positions and he’s not alone.

“A lot of places you can go up and down the street and see ‘Now Hiring’ signs anywhere and everywhere and that’s not just distribution centers and warehousing,” he said. “So, competition for talent is at an all-time high.”

But Smith said he’s keenly aware that the opening of Amazon’s gigantic fulfillment center, located just up the street, will inevitably ratchet up competition for workers.

When the online retailer opens the facility, either this spring or summer, it plans to hire a staggering 1,000-1,500 full-time workers to run the 3.8 million square-foot fulfillment center. With unemployment at historic lows and companies in many sectors already struggling to fill openings, how the injection of so many jobs into the region will affect Central New York’s economy remains an open question.

An example of the robots in use at an Amazon Fulfillment Center.

Most of the jobs will entail warehouse work, but Amazon will also be hiring for roles in human resources, operations management, safety, security, finance and information technology.

Entry-level warehouse positions will likely start at $15.50 an hour, although those jobs can pay more to start depending on where they’re located. Employees will work alongside robots to pick, pack and ship smaller items such as books, electronics, small household goods and toys.

Amazon’s fulfillment center will represent the largest influx of jobs into Central New York in recent memory and is significant given the area’s history of shedding jobs. The traumatic exodus of thousands of good-paying factory jobs—General Electric in the 1970s, the Allied Corporation in the 1980s and Carrier in the 2000s—is seared into the area’s collective consciousness.

It’s worth celebrating the fact that Amazon is bringing a lot of jobs into the area, said Diane Burton, a human resources professor and director of the Institute for Compensation Studies at Cornell University.

“That’s an important economic booster for the region,” she explained. “They’re not high-paying jobs, but they’re reliable jobs with benefits and that is valuable.”

Amazon boasts a national average of $18 an hour among its hourly workers. Full-time employees receive full medical, vision and dental insurance as well as paid time off and a 401(k) with a 50% match. The company also offers up to 20 weeks of parental paid leave.

Brad Griggs, senior manager for economic development, said in an email that in addition to typical benefits and incentives, Amazon has made a $1.2 billion commitment to “upskill” more than 300,000 of its employees in the US by 2025, providing access to the training and education needed to allow them to migrate to higher-paying, in-demand jobs.

“We are always thinking about how we can empower our employees to succeed and thrive,” he wrote. “We think all of those incentives and the opportunities to build your career and advance in the company are differentiating factors.”

When Amazon opens a new facility, it pulls people from existing jobs at other companies, Burton said. It has a sophisticated human resources operation that is skilled at recruiting and screening workers.

The job market is constantly sorting and when better jobs become available, workers will move to those jobs. Ideally, however, that sorting process will also lure workers who are otherwise unemployed into the workforce, Burton said, growing the labor base over the long term.

“In the short run, employers dependent on frontline workers will be threatened,” Burton said. “Amazon is a real threat to them.”

Researchers at the University of California, Berkeley, and Brandeis University found that minimum wage increases at companies such as Amazon, Walmart and Target produced competitors to increase pay for low-wage workers. Amazon was notable for its announcement in 2018 that it was increasing its entry-level minimum wage to $15, said Clemens Noelke, a research scientist at Brandeis who participated in the wage study.

“What we found are fairly distinct and stronger than expected responses by employers in those labor markets then also increasing their wages,” he said. “And oftentimes timed trying to match that $15 minimum wage that Amazon just announced.”

But how were those companies able to react so quickly? Conventional wisdom says the market sets wages and if businesses paid more, they’d be in danger of going under. But Noelke said the research suggests many employers actually have a fair amount of discretion to set wages.

“And they are perhaps substantially underpaying their workers, which is why they have the means to respond immediately when a competitor announces new wages,” he said.

With competition for workers so high, many companies will be forced to respond by raising wages, especially if they’ve been underpaying their workers, said Susan Crossett, CEO of CPS Recruitment, a hiring agency that handles both professional recruitment and temporary staffing for companies in Central New York.

“If somebody’s going to be successful in finding talent, there are a lot of things that they have to think about and pay is one of them,” Crossett said. “They need to be competitive, particularly when you’re looking at entry-level positions like at Amazon.”

Companies that can’t raise wages or that offer competitive pay but are still struggling to attract workers, may have to offer other benefits and perks.

One of the lessons of the pandemic has been that people value flexibility in their jobs and control over their schedules. Even if an employer can’t offer remote work as an option, there are still ways they can offer greater flexibility, Crossett said.

Employers might be able to give workers the option of working four days a week instead of five, guarantee a certain number of shifts at predictable times, or offer time off for things such as doctor’s appointments.

Conventional wisdom says the market sets wages and if businesses paid more, they’d be in danger of going under. But Clemens Noelke of Brandeis University says the research suggests many employers actually have a fair amount of discretion to set wages.

Those kinds of perks might be especially useful for companies competing with Amazon where entry-level jobs can be demanding and the company is very performance-driven and has many systems in place to monitor productivity, Burton said. For example, Amazon has forced overtime; not having forced overtime might be appealing to potential workers.

Employers are also aware that workers are paying more attention to company culture, Crossett said. Are companies treating workers fairly? Are they concerned about the mental health of their employees? Have they gotten involved in the community where they do business? Workers can typically sense whether or not an employer is sincerely committed to fostering a positive company culture and those that are will become more attractive.

At Dot Foods, Smith said the company has focused on highlighting its people-first culture in its advertising and marketing efforts.

“We’re certainly trying to step up our game,” he said. “The labor market has forced us to try to get our brand out there a little bit more than we have in the past and highlight the things that make us different from the Amazons or other competitors.”

That’s particularly important for Dot Foods, which is the country’s largest redistributor of food, but not necessarily as well-known among consumers, even if the company supplies the food at their local restaurant or in their child’s school cafeteria.

The company’s marketing team launched a brand awareness campaign that included radio ads and commercials during NFL playoffs games last season. They’ve also tried to highlight the company’s charitable activities, which have long included significant product donations to food pantries and other nonprofits, Smith said.

“When folks are looking for employment they tend to gravitate to what they know,” he said. “Our approach in this labor market is to try and get folks to know who Dot Foods is.”

Smith said the company is focused on recruiting as well as on employee retention and efforts to ensure workers feel appreciated. For example, workers in the warehouse have a four-day workweek and the company has invested in better break rooms for its employees.

Dot has also adjusted its starting pay each of the last seven years, Smith explained. Entry-level warehouse positions now start at $20 an hour, with the night shift paying $22 an hour.

What effect Amazon will have on the regional economy long-term is unclear. A report by the Economic Policy Institute, a left-leaning think tank, concluded that the opening of an Amazon fulfillment center leads to a significant increase in warehousing employment in the surrounding county, but not an increase in the overall private-sector employment.

Upward pressure on wages will contribute to the sorting process over time, Burton said. Businesses that are not solid enough to pay workers more will likely cease to be viable and may not survive long-term.

In some ways the pandemic has probably also altered the concessions workers are willing to make in the future in terms of pay, flexibility and company culture, Crossett said.

“There really truly is a much different view on work-life balance and many people are looking at it as life-work balance,” she said. “The days of somebody being willing to work two or three jobs to make ends meet I think are limited because you really don’t do anything but work.”

Photos provided by the Amazon Fulfillment Center in Clay

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