Warehouse Wages Are Stalled in the Inland Empire

The ecommerce boom has not only fueled industrial real estate activity; it has also fueled substantial growth of warehouse jobs. The Inland Empire has been one of the biggest beneficiaries of the increase in warehouse jobs this cycle; however, wages have not followed the upward trajectory. According to new research from JLL, wage growth for warehouse jobs in the Inland Empire have stalled. In Riverside County, wages have grown 1.5% since 2007, while wages in in San Bernardino County have grown 16%. Wage growth for warehouse jobs in the Inland Empire trended behind overall wage growth this cycle.

“There was a lot of slack in the Inland Empire’s labor market following the housing crash and the Great Recession earlier in the decade,” Amber Schiada, director of research at JLL, tells GlobeSt.com. “More available labor typically means stagnant wages since employers have the upper hand when they have their pick of the labor pool. The Inland Empire recorded several years of job losses in construction, manufacturing, wholesale trade, and transportation—more so than the rest of the region on a relative basis.”

In the coastal markets, alternatively, warehouse jobs have had healthy wage growth. Wages for warehouse jobs grew 19% in Orange County and 28% in Los Angeles County. These markets were both affected differently during the recession than the Inland Empire. “The housing fallout in coastal markets had a bigger impact on financial services jobs than on warehousing jobs; much of the financing activity tied to the housing sector was done in offices in Orange County and L.A.,” says Schiada. “When those firms shrank or disappeared, the jobs they left behind were tied to financial services or real estate, creating excess labor in those areas, but not necessarily transportation and warehousing jobs.”

The coastal markets have a more diverse labor pool, which has likely contributed to the more substantial wage growth in the warehouse sector. “Coastal markets tend to have more competitive labor markets in general and wages grow faster than in their inland counterparts during times of economic growth,” Schiada explains. “Many employers in the transportation and warehousing sectors have raised concerns recently about lack of available labor near job sites in coastal markets, and many workers are commuting long hours to get to those jobs—this is because housing is more affordable the further inland you go. With that said, coastal wages are higher simply because of the lack of available labor.”

Lower wages in the Inland Empire, however, have helped to fuel growth in the market, along with the availability of developable land. “It’s provided greater opportunity for large distributors looking to hire drivers, forklift operators, and warehouse managers because there’s more available labor at a lower cost in the Inland Empire than in coastal markets,” explains Schiada. “Industrial users are attracted to the Inland Empire because it’s the perfect location for large-scale distributions centers, with easy access to a broad swath of the west coast in a day’s drive.” The Inland Empire, in general, is also more affordable than the coastal markets. “The labor pool inland also enjoys a more affordable cost of living, and homeownership is more attainable providing advantages to both sides of the equation,” says Schiada.

While wages have experienced anemic growth in the last decade, the growth rate may be speeding up. Schiada expects more significant wage growth in the future. “We’re in the longest economic recovery we’ve seen in recent memory, and wages are beginning to show signs of growth across all sectors across the country,” she says. “The U.S. recorded 2.9% annual wage growth for all industries last month. We are reaching a point where competitive labor demand will drive wages more rapidly than before. We’re already seeing some wage growth in the Inland Empire warehousing sector. The demographic changes that are occurring there are also encouraging with new migrants moving in faster than any other place in the state. Wage growth is poised to accelerate there on the heels of this sustained growth.”