Kevin O’Brien

There has been a lot of discussion about raising the minimum wage. In some segments of the working world this may be needed, but in the industrial world (Manufacturing and Logistics.) there is no need to take such action. The supply and demand effect is alive and well and the wages are following suit.

In this portion of the working world, the employees are now driving the bus on wages.

Let’s take a look back…

As recent as just a few years ago there was an abundance of no-skill, low-skill workers willing to take the positions in manufacturing, warehouse, and distribution facilities. In fact, most of these workers would be willing to take ANY position available, even at minimum wage. Those segments had positions, but had limited demand for these workers as we were just coming out of the recession.

Those of us in the staffing industry are usually the “Canary in the Coal Mine” when it comes to employment trends. Early in the start of the economic recovery, we began to see signs of increased employee demands in both manufacturing and distribution. Twelve months or so in to the recovery the demand began to out strip the supply of these types of workers.

Today, the pool is almost completely dry. It has become a situation that you must poach an employee working for another company. For these workers, while being low skill, they will follow the money. To get the numbers of these workers needed to meet the manufacturing output,  the company in need must wave higher wages or they will not be able to secure the necessary staffing levels.

No business operator likes to acknowledge higher payroll and operating costs, but in the employment market today, the new minimum wage is much higher. Supply and Demand economics 101…in manufacturing and logistics you no longer set the entry level wage. The market has set it for you.

Sit back for the ride…you are no longer driving the bus.