Despite Black Friday boom, logistics workers get sold short

Black Friday is a busy time for big-box retailers, as well as the warehouse workers that move their products. But despite claims that the industry provides middle class wages for blue-collar jobs, a recent study finds that warehouse workers in the Inland Empire area of California average $23,000 per year for men and $19,000 per year for women.

Contrast that with $45,000 per year—the figure cited by an industry model developed by the Southern Californian Association of Governments, says Juan De Lara, author of the study and an assistant professor of American Studies and Ethnicity at the University of Southern California.

The figures raise the question of what this means for the economies of regions like Southern California, where logistics plays a vital role and has been touted by business and government leaders as a path towards economic advancement.

President Barack Obama raised the question earlier this year when he visited an Amazon.com shipping facility in Chattanooga, Tennessee, as part of a tour entitled “A Better Bargain for the Middle Class.” It took De Lara by surprise.

“When the president gets up there and says that this is an economic model that will allow us to move forward as a country, I immediately thought, ‘Right, except there’s a huge section of the workforce that doesn’t actually make the money touted in these industry-wide wages,’” he says.

Third-party employers

He says the discrepancy can largely be attributed to the fact that many warehouse workers aren’t actually employed by major retailers such as Amazon, Wal-Mart, and Target.

Workers directly employed by them—which also include large numbers of white-collar workers—might earn an average of $45,000 per year. But most warehouse workers are actually employed by third-party logistics companies.

Many of them have been fined for labor law violations that appear to be systemic problems in the industry, De Lara says.

Southern California workers

His study highlights the critical role that logistics has played in the Southern California economy. The industry employed more than 500,000 people in Los Angeles, Riverside, and San Bernardino counties in 2012, and has long been seen by policymakers as a way to create blue collar jobs in the aftermath of post-1980s manufacturing declines.

Private and public investments in port infrastructure led to a booming warehouse industry. About half of warehouse space needed to meet future port capacity in Los Angeles and Long Beach was expected to be built in inland counties.

Past warehouse and residential construction has made the Inland Empire into one of the fastest growing metropolitan regions in the country during the past 30 years, De Lara says.

Latinos moving into the region has largely driven this growth. Nearly 80 percent of Inland Empire newcomers were Latinos. What does the future hold for this demographic group, California’s largest?

“Most Latinos in the region work in blue occupations—more than 50 percent of Inland Southern California’s adult Latino population doesn’t have a college degree,” De Lara says. “So what’s the economic future for them in a region where warehouses and retail stores—both sectors with relatively low wages—are major employers?”

Wal-Mart’s power

While policymakers certainly have a role to play, the real decision-makers may be the corporate retailers driving the industry. Wal-Mart in particular has incredible power when it comes to determining this economic structure, De Lara says.

Pressure put on them by advocacy groups and the media has changed its behavior in the past. Wal-Mart has shifted to purchasing more American-made products and locally grown food due to increased media attention, as well as increasing its energy efficiency.

When $2.8 million in labor law fines were imposed on logistics contractors this year, Wal-Mart moved to distance itself from those companies.

It’s in its interest to do so, De Lara explains. “When Wal-Mart makes a decision to make these types of changes, it has a tremendous effect, not only across the industry but across the economy,” De Lara says. The question remains: “Will it turn a blind eye or take a leadership position and really have a positive effect on workers at large?”