How Should You Set Your Warehouse Employees’ Pay Rates?

Macee BrothertonEmployers

Pay can be a tricky thing to manage. If you're not careful, you could end up paying too much for a position that could have been more strategically calculated, or not paying enough and not getting the candidates you need to fill your jobs. Both of these scenarios could have costly consequences. 
As a staffing agency, we get asked this question all the time: What should our pay rates be? 
The answer to this seemingly simple question? Well, it’s more complicated than you might think. There are a variety of factors to consider when setting your pay rates in order to position your jobs competitively, while also managing payroll expenses.
Let’s talk about what you should consider about your company when setting pay rates. 

Location

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Location, location, location. It matters in real estate and in setting pay rates. Why? You need to consider the location of your worksite to determine what you should set your pay rates at for certain positions. This is something you need to consider whether you’re in a desirable, heavily populated location, or a less desirable, less populated location, as it affects employers on both sides of the spectrum. 
If you’re in a more desirable location, meaning likely more heavily populated with a larger number of job seekers, you might need to set pay in a way that will help you stand out amongst competitors. Job seekers will have a wider variety of employment options, and pay might be one way you set your company apart to attract talent. 
On the flip side, if your worksite is in a less desirable, less populous location, pay will still come into play. Maybe you have fewer competitors in the area, so you have fewer companies that job seekers might be comparing pay rates for. However, being in a less desirable or populated area means you’ll also have a smaller applicant pool. Particularly if you are looking for talent to fill some of the harder-to-fill, more skilled positions, pay might play a big role in whether or not you get the qualified candidates you need.

Experience required

Another aspect of the job to consider when setting the pay rate is how much experience you are requiring of your applicants. This is because there can be a conflict between the amount of experience you are requiring applicants to have and the pay that you have set for a specific role.

Put yourself in the mind of the job seeker. Seeing a long list of required experience and qualifications will disqualify a lot of candidates very quickly, but not always the ones you want to be disqualified.

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If your position requires minimal training, we propose you reconsider your experience requirements. For instance, if a job only requires a day to train, don’t put any experience requirements on it at all. This actually has benefits beyond being able to market a job for a lower, entry-level rate. Opportunities for development rank high amongst many job-seekers desired benefits at a job.

Background policy

One factor that could impact the pay you need to set to bring in applicants is the background policy you have in place for your positions. This heavily influences the size of the applicant pool that you have, meaning you’ll likely need to raise pay rates to attract a higher percentage of that more limited pool.

Here are a couple of stats: 

  • According to the Sentencing Project, 70 million Americans have some sort of criminal record.
  • More than half of unemployed US men in their 30s have a criminal record.
  • According to the Brennan Center for Justice, 1 in 5 Americans have a criminal record of some kind.
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As you can see, there’s a huge group of Americans in the workforce you might be excluding without even realizing it. And when you diminish your applicant pool, you’ll likely need to raise wages to find the people you need.

Benefits

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Research backs up that health benefits in particular are increasingly important to applicants as they make career decisions. According to a 2022 survey by FlexJobs, when asked what compensations and benefits are most important to them, participants said the following benefits:

  • 63% specified health insurance
  • 62% specified vacation time
When applicants are considering the pay of a job, they also look at the benefits being offered as part of the compensation package. If you offer benefits like insurance or vacation time, you distinguish yourself from competitors, impacting your candidate pool.
Conclusion

These are just a few of the factors we suggest employers take into consideration as they attempt to set their pay rates to attract the candidates they need. For more information on what our applicants are looking for when it comes to pay, download our pay analysis.