LOUISVILLE, Ky.—The pandemic-fueled online shopping boom has created a severe labor crunch in the Louisville, Ky., metro area, as delivery companies and other businesses compete for workers in one of the nation’s top freight transit hubs.
The region’s unemployment rate has fallen steeply to 3.2% in October from its recent pandemic peak of 16.8% in April 2020. The rate in October, the latest month for which local data are available, was more than a percentage point below the national rate then of 4.6%.
The region has regained most of the 93,000 jobs it lost after the pandemic hit the U.S. economy in March 2020. The area counted about 634,000 jobs in October, which was 16,000 below its total in February 2020 and well above its recent low in April 2020, according to Labor Department data.
One key contributor to the region’s labor market recovery is United Parcel Service Inc.’s Worldport, among the largest air cargo facilities in the U.S. The company says it employs more than 25,000 people in the area, about the same as at the end of 2019, but they are paid more and working more hours than before the pandemic. The company also estimates its activities support at least another 35,000 jobs in the region, for example at grocers, auto dealers and other retailers.
The willingness of UPS and other big companies to raise wages in a tight labor market has put pressure on other regional employers to raise pay to compete for workers who face many options, local business executives say.
“We’re fighting for those part-time employees who say, ‘Hey, should I go work for Amazon, should I work at McDonald’s, should I work at Green District, should I work at Kohl’s ?” said Chris Furlow, co-founder of the Louisville-based salad chain Green District.
When considering where to set wages, “we can’t go down low, and we can’t go super high” because of the economics of a fast-food restaurant, he said, as employees cleaned up from the lunch rush at the Highlands neighborhood location.
Green District, which plans to expand to 30 restaurants around the country next year, has hired around 100 workers for its six locations, including four in the Louisville area.
Salad chain Green District has hired around 100 workers for its six locations, including four in the Louisville area.
Hourly employees at Green District earn around $19 an hour including tips, and general managers make a starting salary of $45,000 to $65,000.
Customers at a Louisville Green District, which plans to expand to 30 restaurants around the country next year.
Hourly employees earn around $19 an hour including tips, and general managers make a starting salary of $45,000 to $65,000, with the chance to make $5,500 in bonuses each quarter.
Louisville’s historic strength in transportation industries—it is within a two-hour flight of 75% of the U.S. population and has attractive river, highway and rail links—has lured other major employers benefiting from growth in online shopping and demand for quick delivery during the pandemic. Amazon.com Inc. has expanded rapidly in the region, with new warehouses in Louisville and just across the Indiana border.
Employment in transportation and warehousing has grown steadily in Louisville over the past decade. The area counted 64,700 such jobs in October 2021, up from 42,200 in October 2011, according to the Labor Department.
The proliferation of these jobs caused the local chamber of commerce, backed by major local employers, to change its ad campaigns to bring job seekers to Louisville. Instead of targeting college graduates, they now focus on people without such degrees who can fill roles at local shipping companies and manufacturers.
“You can have a good life here in our community without a degree,” said Sarah Davasher-Wisdom, chief executive officer of Greater Louisville Inc., the regional chamber of commerce.
“‘You can have a good life here in our community without a degree.’”
UPS has raised wages to attract and retain workers. The company said in August it would increase hourly pay at Louisville’s Worldport to $20 for its daytime sorting operation from $16.50, and to $21 for its nighttime sorting operation, up from $18.50. Elsewhere in the country, the base hourly rate for UPS package handlers is $15.
Shifts are longer too: While the day shift typically used to start at around 11:30 a.m. and end in midafternoon, it is now common to start shifts closer to 9 a.m. to deal with the larger number of overnight and two-day air service packages, UPS spokesman Jim Mayer said, while guiding a visitor through a humming Worldport in early December.
Metal containers full of Barbie dolls, frozen Chicago deep-dish pizzas and piles of Amazon Prime boxes rolled off UPS’s cargo jets and onto 155 miles of conveyor belts, where workers sorted packages by size and shape, checking for leaks before directing the parcels to their next destination.
“It’s working very well,” Tony Georges, UPS Airlines’ vice president for human resources, said of the changes. “We’ve seen improvements in both flow and retention” of workers after raising wages and boosting hours.
UPS has raised wages to attract and retain workers, including boosting hourly pay for its daytime sorting operation at the Louisville-based Worldport facility to $20 from $16.50.
Ground crews unloaded an aircraft at Worldport. UPS employees have been working longer shifts recently.
UPS workers staffed a control room at UPS Worldport in Louisville. The carrier has said worker retention has improved after raising wages and boosting hours.
An overflow area at UPS Worldport. While day shifts typically used to start around 11:30 a.m. and end in midafternoon, many now begin closer to 9 a.m. to handle more overnight and two-day air service packages.
Also contributing to the Louisville region’s tight labor market is a smaller labor force than before the pandemic, with about 20,000 fewer people holding or seeking jobs.
Kentucky has long had a lower labor-force participation rate—the share of adults working or looking for work—than the rest of the country, according to Labor Department data. Even before the pandemic, its rate in February 2020 was 59.3%, compared with a national rate of 63.3%. The state’s rate in October was 56.6%, ranking 49th in the nation.
“‘It’s always been the most difficult to staff, but we hadn’t seen the holes that we’re seeing now.’”
Local business leaders attribute that shortfall to child-care shortages, higher levels of savings during the pandemic, and people kept out of the workforce because of drug and alcohol issues and criminal records.
Employers that need to staff shifts with irregular or undesirable hours are having a particularly hard time finding workers. At HJI Supply Chain Solutions, a family-owned warehousing company whose main customer in the area is Ford Motor Co. , has had trouble staffing its overnight and weekend shift.
“It’s always been the most difficult to staff, but we hadn’t seen the holes that we’re seeing now,” CEO Lynn Moore said.
Some who worked previously in warehouses don’t want to go back. Daniel Lotz, a 35-year-old Kentucky native who recently moved back to Louisville after a brief stint as a warehouse manager in Chicago, said he was hoping to find a different line of work.
Daniel Lotz, a 35-year-old Kentucky native, recently moved back to Louisville from Chicago, and hopes for find a job in a line of work other than warehousing.
“I see the job postings and I know how it works—I’m not really interested in that,” he said, noting that in his three years in warehousing he worked overnight shifts, which didn’t allow for a healthy work-life balance.
Though he has yet to find a job since moving back to Louisville in September, he intends to hold out for something he wants to do, with pay similar to what he made in Chicago—which he described as “higher than the Louisville average.” He is living off his savings in the meantime and working with a career counselor.
“I want to find the right job to work hard for somebody,” he said.
Write to Gabriel T. Rubin at gabriel.rubin@wsj.com
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