May 12th, 2016

E-Commerce Takes Hit from Wage Increase

Category:Hara Partners | Posted By Mai Erne at 8:39 PM

E-Commerce Takes Hit from Wage Increase

E-Commerce takes hit from  wage increase. One report states that warehouses with 500 or more workers may see an annual rise in labor cost by $1 million or more. This news might sound alarming to people who rely on cheap labor to keep their small business afloat. Also with the growth of the e-commerce industry it has made these companies move their warehouses and distribution centers closer to larger metropolitan areas.

Worries About the Increase in Minimum Wage

With cities like Los Angeles, San Francisco, and Seattle all raising their minimum wage far beyond the federal minimum wage of $7.25 it is likely that many businesses will have to find a way to cut costs. Sometimes this will mean to lay off huge numbers of their workforce and downsize using automation.

“E-commerce and other businesses that are tied to these dense locations will see the greatest impacts” according to Spencer Levy, CBRE’s head of research in the Americas.

Don’t Worry About the Big Bad Minimum Wage

However, e-commerce companies should not worry that much because the average warehouse worker make an average of $12 an hour which is well above the minimum wage in most states. So e-commerce and other industries can breath a sigh of relief.

According to the Wall Street Journal, most e-commerce business costs are in transportation, about 50%, and labor costs are only 20% of the budget of these companies. Also these companies have cut much of their labor cost by using automated computer systems, so their running on a bare bones business structure. So if you are worried about your e-commerce company up and moving you can relax, if you have a job with an e-commerce company it is likely that they need you to do a job for them.

So apparently the e-commerce industry will continue to grow for a while as some states are raising their minimum wage, while others have no plans to. It really doesn’t matter much to these companies.

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