Carlos Giron, director of human resources and security at AMS Fulfillment Inc. in Valencia, faced a conundrum this year as he prepared to hire temporary workers for the holiday season. Despite an increase in the number of people seeking employment at the multi-channel distribution and fulfillment center, the pool of qualified applicants seemed to be dwindling. “There has been a noticeable spike in the number of walk-ins (seeking jobs),” Giron said. “But there’s a difference in the candidates who are willing to work versus those who are qualified to work.” AMS management may have found a solution – but it isn’t the only distribution company grappling with a constricted labor market, especially as e-commerce grows for the looming holiday shopping season. While unemployment figures are near historic lows, retail spending is predicted to reach post-recession highs in November and December. Sales are expected to grow almost 4 percent year-over-year to $656 billion, according to the National Retail Federation. A survey conducted by research firm Kelton Global on behalf of RetailMeNot Inc., a publicly-traded online coupon company based in Austin, Texas, found that 61 percent of shoppers plan to spend more on gifts this season than last. Labor expert Barry Asin, president of consulting firm Staffing Industry Analysts in Mountain View, noted that while a dearth of qualified candidates is affecting every rung on the retail supply chain, distribution and fulfillment centers like AMS may fare the worst. “As we’re heading toward a full-employment labor market, in or under the 5 percent range, it’s pretty natural to find that there are fewer qualified workers competing for jobs,” Asin said. “This is especially true for fulfillment and distribution centers – they already have trouble (filling positions), because they’re not the glamourous types of jobs.” Automation and wages National data supports this claim. While job openings in the transportation, warehousing and utilities sector fell from 4.3 percent to 4.1 percent nationwide between July and August, they remained more than half a percentage point higher than for the same period last year, according to data from the Bureau of Labor Statistics. On top of that, e-commerce is predicted to drive a significant portion of consumer spending this holiday season. The National Retail Federation expects online sales to increase between 7 and 10 percent over 2015 to as much as $117 billion. As online orders reach record highs, distribution and fulfillment warehouses will handle the bulk of e-commerce shipments. Automation can’t provide relief in the short term. Facilities that have supplemented their human labor with machines now need workers with the skills to operate them, noted Steve Drexel, chief executive of Cornerstone Staffing Solutions. Finding qualified workers to fill positions in his clients’ Southern California warehouses is proving more difficult this year than in the past, due in part to more sophisticated technology. “We haven’t had as many problems filling the unskilled labor, the kind of labor you might see during seasonal peaks,” he said. “The harder thing is to fill the more skilled positions – the forklift drivers, the order fillers – that are actually working in the warehouses.” Training low- or unskilled employees is one option, but qualified seasonal hires will still need to be brought in from outside in order to meet sales volumes. The demand for such employees is great enough that many don’t have to settle for inflexible hours or minimum wage. For local warehouses, that presents another issue. After the minimum wage bump to $10.50 in July, Los Angeles County businesses with more than 350 workers will pay hourly rates of about 17 percent more than last season. Each hire thus represents a larger investment – one that warehouses have little choice to make if they hope to keep up with rising volumes from e-commerce. Unconventional solution Fortunately for Giron, AMS Chief Executive Ken Wiseman and President Jay Catlan may have found a way to alleviate the warehouse worker shortage – both during the holiday hiring spree and throughout the year. One aspect of their strategy lies in recruiting from the estimated 37.3 percent of civilians outside the labor force. In this case, that means looking to nonprofits, charter schools, federal assistance programs and other social resource groups for job candidates. “The nature of our work is that we have a lot of fairly quick-to-train positions available,” Wiseman explained. “That makes us the perfect candidate to take a role in trying to get people who need jobs into the job market, get them some training, and let them either advance with us or advance in the community in other businesses.” Between 25 and 30 percent of AMS’ workforce, at minimum, was once part of a population labeled as “difficult to hire,” Giron estimated. The company’s employee roster includes ex-convicts, at-risk youth, individuals with physical and developmental disabilities and veterans, all of whom were recommended to AMS through various organizations. “When we’re ready to hire some individuals to do entry-level jobs, we don’t want the guy who finds us on Craigslist and (applies) because his wife is going to kick him out of the house,” Wiseman said. “We want the organization that sends him or her to say, ‘This individual wants a job, they’re excited to work, and we think they’d be a perfect fit.’” But what about the positions that require advanced skills, such as driving a fork-lift or working on a computer? Thanks to a partnership with College of the Canyons in Santa Clarita, Wiseman and Catlan can offer that training as soon as an employee is hired. “Through College of the Canyons, we now have our own education programs where we can provide English as a Second Language, introductory Excel and Outlook courses,” Wiseman said. “We plan to start offering elementary computer skills, too, as well as supervisory and management courses.” The program is funded by state and federal grants through the college. As part of the contract with the College of the Canyons, all courses offered to AMS employees must be open to the public. That provides yet another opportunity to attract qualified workers, Wiseman said. “This way, we can introduce people to our culture,” he explained. “We hope that becomes a way for people to learn about our company and maybe eventually get a job here.” The original theory behind this program, explained Catlan, was that investing in employee education would be a way to balance cost with productivity in light of a rising minimum wage. “In order to compete nationally when we’re at $15 an hour while other cities are still at $10 or even $8 an hour, we’re going to have to do more with the labor that we have,” he said. “So we said to ourselves, ‘What can we do to make our employees more effective?’” That’s the long-term strategy. For the upcoming holiday, AMS plans to make up for a shortage of qualified temporary employees by bringing in students from College of the Canyons and participants in the L.A. County Sheriff’s youth program, as well as offer overtime to current workers. AMS expects to add at least 40 seasonal employees to its 340-strong workforce in November and December. “Much of what we do with the community helps us with what we need,” Wiseman said. “But we also do it because we have a role in the community.”
Too-Tall Order?
