Pay a concern as local warehouse job growth explodes

Jun. 25--The number of warehouses, logistics and distribution centers is exploding in the Dayton area, and the economic benefit created by the flood of jobs is offset by concern that the pay for some of the jobs can cause workers to essentially lose money.

The Dayton Daily News Path Forward initiative seeks solutions to the most pressing issues in our community, including making sure our region is prepared for the economy of the future. This story examines the logistics industry, one of the fastest growing job producers in the Dayton area, and how the jobs in that industry are reshaping the region's economy.

One of the most-common types of jobs in those facilities pay a median wage of $12.79 an hour, according to the most recent U.S. Bureau of Labor Statistics (BLS) data for laborers and freight, stock and material movers. That's a little more than $26,000 a year for a full-time job.

For Amazon, which is building a logistics hub in Butler County, jobs will start at $15 an hour.

The median wage in that category of workers for Ohio as a whole is $13.67.

That pay-level puts some workers in a Catch-22, according to local labor market advocates; if it is the main income for a family it can actually cause a household's overall income to drop.

For single workers, $15 an hour is a "good solid wage," said Karin VanZant, vice president and executive director of life services for Dayton managed care company CareSource.

But for parents, she added: "It could be the worst wage for you and your family."

The Dayton median wage for these types of jobs brings in an income of about 127 percent of the poverty level for a family of three, according to BLS data. Michael Shields, a researcher for Policy Matters Ohio, a labor-focused policy research and advocacy group, said 130 percent of the poverty line for a family of three "a really basic living wage."

Workers with families who make that pay range may receive food stamps and other key federal benefits, but eligibility is reported and assessed monthly. If a worker has an overtime shift or two, he or she could lose food stamp benefits, she said.

When a job pays $15 an hour -- which Amazon last year declared as its minimum starting wage -- key benefits can be lost altogether, VanZant said.

"You've lost so many benefits, that you're in the hole $600 a month," she said.

'What comes with that pay'

Companies that are creating these facilities, however, say that their pay is only part of a benefit package that can genuinely help a family be stable.

An Amazon representative declined an interview for this story, but the company did send a statement in response to questions from the Dayton Daily News.

"We encourage anyone to compare our median pay and benefits to other retailers and major employers," the company said. "All Amazon employees -- full-time, part-time, temporary and seasonal, effective November 1, 2018 -- receive a $15/hour minimum wage."

Amazon said its benefits package includes health, vision and dental insurance, a 401(k) program with a 50 percent match of the first 4 percent of the employee's pay, parental leave and career training.

"Additionally, we employ thousands of people in Ohio who chose part time or seasonal roles," the online giant added. "Previously reported figures on SNAP eligibility of employees can therefore be misleading because they include people who only worked for Amazon for a short period of time and/or who chose to work part-time -- both of these groups would almost certainly qualify for assistance if Amazon was their only job during the year."

Chewy pet products, which is opening a distribution center with about 500 workers near Dayton International Airport, has said its pay is competitive.

"Chewy offers competitive wages for the market plus an excellent benefits package, including medical, dental and vision insurance plans within the first 30 days of employment," the company said in a statement to the Dayton Daily News last month.

Chewy employees receive two wage increases in the first six months and every six months thereafter, said Gregg Walsh, vice president, fulfillment center human resources operations for Chewy.

"Something important for potential candidates to know is that Chewy has tremendous opportunities for career growth and individual development," Walsh said in an e-mail. "We strive to promote from within and have many team members who have risen from fulfillment specialist positions to management levels."

Developers and those working to encourage the creation of logistics jobs say supply and demand is the most efficient mechanism for setting wages in any industry.

Further, they say that many employers choose to build in the Miami Valley because the area is seen as a haven for those seeking lower business expenses, including labor.

Altering that calculus could drive new employers -- and new jobs -- away, these advocates caution.

Ted Griffith, JobsOhio managing director for technology, logistics and distribution, notes these jobs pay well above the Ohio minimum wage of $8.55 and the U.S. minimum of $7.25.

And they pay better than comparable positions in retail or food services, Griffith and others say. The Dayton MSA median wage for food preparation is $9.49, according to recent BLS data. For waiters and waitresses, the Dayton median is about the same, $9.50.

"The average wage is considerably higher for a warehouse worker," said John Haber, founder and chief executive of Atlanta-based supply chain consultant Spend Management Experts. "I think, on average, in most cases, they're making higher than other sectors."

Griffith and others also point to benefits beyond wages. Amazon, for example, offers full-time and part-time hourly employees who are eligible a "career choice program" that prepays 95 percent of tuition for college courses related to "in-demand fields."

"The point I think needs to be emphasized is: What comes with that pay," Griffith said. "And I'm just so proud of so many of our e-commerce providers that are here in Ohio -- they're not just paying a wage. They're paying for retirement benefits, the 401(k) program. They're paying for health insurance."

Competitors notice, he said.

"I'm seeing other companies start to go this way, as well, of doing something even more cool on top, which is helping pay for the education of the employee to lift themselves up," Griffith said.

"That's life-changing," he added. "That shouldn't be ignored."

Last year's Amazon minimum wage increase is bound to force others in logistics to at least consider raising their own wages, Haber said.

"It forces other people to match that," he said. "It's almost like them (Amazon) announcing next-day shipping for free. Everybody has to catch up and match that."

Economic impact

In a 2015 report on the logistics industry, Wright State University's Center for Urban and Public Affairs said the industry directly employed 12,564 residents, with a ripple effect leading to total employment of nearly 20,000 jobs in three counties, Montgomery, Greene and Miami.

The report -- which was commissioned by the Dayton Area Logistics Association -- said the industry had a total impact of more than $2.5 billion on the region.

The report also said the industry secured $855 million in labor income, nearly $27 million in state and local sales and income tax revenues.

Chris Kershner, executive vice president of the Dayton Area Chamber of Commerce, said the pay rates matter but that workers don't usually stay in starting-wage jobs. And they have bountiful choices in an era of low unemployment.

"The beauty of a low unemployment job market is workers have more choice about where they want to work," he said.

A growing sector

Wage trends for this industry matter nationwide because these jobs are growing in many places, industry-watchers say.

"In some of these large cities, like L.A., 25 percent of the job growth is in warehouse jobs, in the logistics sector," Haber said.

Laborers and freight handlers were the fourth most numerous category of jobs in the Dayton MSA in 2018, with 7,970 people employed in that single category last year, according to Policy Matters Ohio.

There are more workers in that category than waiters and waitresses, janitors or customer service representatives.

New distribution centers can be seen across the area. More than $92 million in investment near Dayton International Airport in recent years has resulted in five commercial distribution centers totaling more than 2.7 million square feet, employing (or soon to employ) almost 2,300 people.

A Federal Express complex is near Austin Boulevard south of Dayton and Amazon is looking for 750 employees for its new facility near Butler County's Monroe.

Glenn Richardson, JobsOhio managing director for aerospace and advanced manufacturing, said the state's private development arm carefully monitors wages of employers who have drawn incentives to come to Ohio.

"There has been some improvement in wages, and we recognize, certainly in the economic (development) community, that we need to continue to focus on living wage jobs," Richardson said.

"Not all of these are what we would consider living-wage jobs," he said. "But when you put in the benefits package on top of it, and when you look at the impact to the other competing industries, even in food and retail ... these large distribution centers put (upward) pressure on wages."

'Subsidy cliff'

Still, Shields points to what he calls a "disconnect" between the wealth workers help create and the wages they take home.

"I find it very concerning for a number of reasons," he said. "This is one of the most common jobs we see in both the state and for the Dayton MSA."

He acknowledges that entry-level jobs aren't meant to be careers, but he notes the median pay is actually falling in inflation-adjusted terms.

In the year 2000, laborers and freight stock handlers for the state of Ohio as a whole were paid a median of $9.67. Today, it's $13.67. If pay in that field had kept pace with inflation, the median would be $14.39, Shields said.

"We have to start being more purposeful about job quality across the board," he said.

CareSource's VanZant -- whose job includes helping workers navigate benefit requirements -- has briefed JobsOhio officials, sharing with them her concern about the way workers who earn these wages can ultimately lose more than they gain.

VanZant stressed that she did not want employers to lower pay, but she noted the perverse nature of the subsidy cliff: Thanks to benefits and subsidies, a family with a sole breadwinner making $12.50 an hour can actually be better off than one in which the breadwinner earns $13.50 an hour.

When someone's pay hits around $13.50 an hour, workers can lose $400 or $500 a month in SNAP (Supplemental Nutrition Assistance Program or food stamp) benefits, housing subsidies and more.

If a car repair or other emergency arises, workers can reassess their situation, fueling a disincentive to work, VanZant said. She finds that employers often don't understand why workers abruptly quit.

"If you lost $600 a month in food for your family and had no way to make that up, you might make the same choice," VanZant said.

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