A representative of JLL has released a report from the firm that shows a bifurcation between the wage growth of warehouse workers in the Inland Empire vs. the coastal markets. Somewhat surprisingly, given the strength of the IE warehouse sector, the report shows wage growth for warehouse employees in this market is not keeping up with that of its coastal neighbors.
As the chart below illustrates, the report finds that since 2007, annual wages for warehouse and transportation workers has grown 28 percent in Los Angeles and 18.9 percent in Orange County but only 4.7 percent in San Bernardino County and 1.4 percent in Riverside County. But there’s another disparity, according to the report: warehouse and transportation workers’ wage growth since 2007 was significantly lower than wage growth in all industries in the IE markets. Annual wages in all industries grew 19.9 percent in San Bernardino County and 16 percent in Riverside County, demonstrating a considerable spread between the subset and the total, the report says.
According to the report, “In Southern California, warehouse workers in coastal labor markets have seen their paychecks grow consistently, if not modestly, since the recession. On the other hand, warehouse and transportation wages in San Bernardino and Riverside Counties remained relatively static during the same decade.”
The report says one explanation for stifled warehouse wage growth in the Inland Empire over the last decade could be a less diversified employer base. “Large e-retailers employ hundreds of warehouse workers per distribution center in the IE, setting the bar for wages and also creating a less competitive labor market.”
As additional companies expand into the e-commerce fold, big-box labor markets like the IE will become increasingly diversified and in turn, more competitive, the report concludes.
SoCal Real Estate reached out to the rep for more information on when that diversification and subsequent increased wage growth might take place, and was told by Amber Schiada, JLL’s senior director of research, “The Inland Empire felt the fallout from the housing crash more acutely than anywhere else in Southern California, with several years of job losses in construction, manufacturing, wholesale trade, and transportation. This led to an oversupply of labor, and when that happens you see wages stagnate. The economy is recovered now, and the boom in ecommerce and construction activity in the region is creating many jobs for all kinds of workers.”
Schiada adds that the IE is also the most-affordable housing market in Southern California, which is spurring demographic growth. “I think more rapid wage growth is on the horizon, especially after seeing today’s U.S. jobs report, where wages increased by 2.9 percent year over year. We are reaching a point where competitive labor demand will drive wages more rapidly than before.”