What is a Labor Market Analysis?
As we continue to face labor shortages, contractors struggle to recruit drivers for their operations. To help contractors recruit more effectively, we have partnered with Bright Flag Recruiting. Bright Flag Recruiting is premier recruiting company with deep experience in logistics recruiting.
One of the biggest challenges contractors face when buying or operating in a market is determining what they need to pay to be competitive when recruiting and retaining drivers. The number one thing that impacts a contractor’s business is turnover and absenteeism. In our operations, we experienced 30-40% turnover per year.
Turnover comes at a high cost.
When you lose employees and replace them with new team members, their delivery capacity is not as fast and efficient as your seasoned drivers, impacting your profits and efficiency.
In some markets, you can pay drivers $650 or $700 for a 5 day work week, and that is enough. However, you can also pay $900, which is a substantial premium, for a much higher quality employee. Now, if your $650 or $700 delivery driver can complete 100 deliveries a day, you can hire great drivers who deliver a high amount of stop volume. Having drivers who can deliver a high volume of packages saves you from deploying additional resources.
From looking at a labor market analysis, we learned what the baseline or minimum pay was within our market and offered drivers 25-35% higher pay. This means hiring quality drivers who can run efficient routes. Here’s the key: you save the number of routes you run, ultimately saving money.
Every route you run costs about $95,000 per year in operating costs. This includes your wages, fuel, repair and maintenance, scanners, uniforms, and workers’ compensation insurance. So, if you are paying a driver more than the average pay in your area, they are more likely to show up to work, be a quality driver, and run their route efficiently.
Labor Market Analysis Details
The market analysis is a three-page document, including an in-depth evaluation of your market. Many contractors mistake hiring from their territory’s closest major city. Trying to hire employees from the nearest largest city means:
Possibly hiring from a more expensive demographic
Having workers with long commutes
Competing against bigger companies compared to targeting smaller markets
If you only target major cities, you’ll compete with companies with bigger balance sheets and bigger salary budgets. That’s why having a strategy for hiring is crucial to operate a successful and profitable business. When you receive your labor market analysis, you can expect the following details:
Compensation and Benefits
We take a look at various metrics such as:
Minimum wage: Wages differ from state to state, so we provide details about the wages in your area to get an idea of the minimum pay.
Manufacturing and warehouse: We provide information on manufacturing and warehouse information that correlates with this type of business.
Amazon: Amazon is in every space across the country. We look to see what Amazon is paying its drivers.
Benefits: We look to see if companies are providing health insurance, offer a 401k, give vacation time, and other incentives to help make you competitive compared to others in your market.
Unique Characteristics
We provide you with unique characteristics of your territory, including:
Unemployment rates
Labor demographics
Population changes
We also look at other job posting websites and examine their postings compared to your current postings. Your subject lines for job postings on Indeed or Craigslist are essential. It’s important to capture people with the right postings and ads.
Once your analysis is complete, you will receive a 30-minute call with Patton Logistics’ Chief Operating Officer to review the results and ask questions.
Get the Most Out of Your Operation
Route Consultant is the premiere consultant and educator in the last-mile delivery and logistics space. Want to get the most out of your investment? Looking to optimize your operation and maximize profits? Need to teach someone how to successfully manage a delivery operation? Our suite of educational courses capitalize on decades of operational experience to bring you battle-tested strategies and best practices to find success in your business.
