Serving UIC's Great Cities Commitment: Solutions for Today's Urban Challenges

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The following is a guest blog by GCI Senior Research Specialist Beth Gutelius on the release of a new report authored by her along with Nik Theodore, Ph.D. This blog is concurrently posted on Medium.

Technology has changed the way many people shop, fueling the meteoric growth of e-commerce. With a click, customers now expect a box filled with any number of goods to arrive at their doors — sometimes the very same day, a sea change from even a few years ago. While some of the ripple effects of e-commerce are more obvious — like the army of last-mile delivery drivers on the streets — others are largely hidden from view, tucked away in cavernous buildings in industrial parks, where warehouse workers hustle to assemble orders. The pressure to meet quick order turnaround, driven largely by Amazon’s standard-setting delivery promises, has contributed to onerous labor conditions in warehouses across the country, conditions that appear poised to worsen in the coming years.

In a report published today with Nik Theodore, Ph.D., professor of Urban Planning and Policy at the University of Illinois at Chicago, and commissioned by the UC Berkeley Labor Center and Working Partnerships USA, we examined how technological changes in warehouses across the United States might impact workers and reshape the nature of warehouse work.

Over one million people work in warehouses across the U.S., a number that is growing due in part to the rise of e-commerce. The industry is the invisible backbone of the economy: almost everything we buy passes through a warehouse at some point in its journey. Yet we rarely think about them, or the workers inside. To understand how technology might be used in warehouses and the potential impacts on jobs, we explored the decision-making factors warehouse operators face for insights into what the future may hold. We interviewed warehouse operators, management consultants, and technology providers; attended industry conferences; and reviewed current literature and data on the warehousing industry. Here’s what we found:

In contrast to the seemingly endless stream of reports predicting widespread job loss due to automation, our study shows that over the next decade job quality–not quantity–is a far more pressing concern. That is, the working conditions and content of warehouse jobs are likely to change, with potentially negative impacts on workers. We identified three main categories of potential shifts in the content of workers’ jobs: work intensification, algorithmic management, and de-skilling.

Warehouse work tends to be hard on workers’ bodies. Some new technologies could reduce the most grueling parts of the job, like walking or awkward lifting positions. Our research found, however, that these potential improvements in job quality will likely be coupled with increases in the pace of work, which could lead to a net deterioration of working conditions. For example, Amazon’s MissionRacer video game pits workers against each other to see who can assemble orders the fastest. Algorithms that govern the pace of work can increase pressure to work quickly, introducing new forms of workplace control and surveillance, where the monitoring of workers’ performance is granular, scalable, and relentless. These technologies are critical in the push for speed-ups. Wearable devices and sensors track workers in new ways, and can take away their autonomy and flexibility.

De-skilling is the process of breaking up a job into smaller bits of work and figuring out which activities to simplify or to which technology could be applied. For example, some autonomous mobile robots lead workers across a warehouse, choosing walk routes, pacing the worker’s speed, and simplifying the process of picking an order. These robots can remove nearly all decision-making on the part of workers, which for employers means you can hire just about anyone to do it–including temporary workers. For workers, it could lead to lower wages and more job insecurity.

Taken together, these changes in warehouse work could lead to an increase in health and safety issues, as well as increased employee turnover due to overwork and burnout. Currently, people working in warehouses experience work-related injuries at a rate nearly twice that of other private industry workers – higher than construction, coal mining, and most manufacturing industries. Health and safety impacts could intensify as workers are incentivized to increase their pace of work via new technologies like gamification and monitoring.

And we have to remember that any increase in risks on the job will be felt unevenly — according to Census data, 66% of front-line workers in warehouses are people of color, despite making up only 37% of the overall labor force. In particular, changes in warehouse working conditions, including those that could lead to chronic pain and psychological stress, could disproportionately affect Latinx and Black communities, with persistent, long-term impacts.

What is driving these trends and the transformation of the warehousing industry is e-commerce. The combination of labor-intensive e-commerce order picking and the speed with which these orders must be shipped is motivating experimentation with new technologies. The effects of Amazon are visible across the industry, as companies clamber to find ways to compete and many look to new technologies to gain efficiencies.

Despite our concerning findings, we do not believe warehouse workers are necessarily doomed — if we can break out of the commonly-held notion that the path of technological change is inevitable. Technology is neither inherently good nor bad. Humans create technologies, and our biases get baked in on the front end; and humans can exercise choices about how technologies get implemented and overseen. We will need bold, creative thinking about how to ensure both innovation and shared prosperity, and what roles policymakers, employers, and workers need to play to shape the trajectory of technological change.

Warehouse operators stand to benefit significantly from new technologies, but it’s critical that these gains be shared, that workers be involved in identifying which efficiencies should be prioritized and what hazards are being introduced, and that experimentation unfolds with regard to for more than just productivity increases. Absent this, the process of technological change in warehousing will resemble a win-lose proposition, where the short-term benefits are captured by the industry and the long-run costs are borne by workers.

Beth Gutelius is senior research specialist at the Great Cities Institute. Her academic and consulting career has focused on urban economic development and the changing nature of employment. Her research examines the structure of the fissured logistics industry and its evolution, both in Chicago and nationally. As an advisor and research consultant to philanthropic organizations, Beth has worked with the MacArthur Foundation, Ford Foundation, Irvine Foundation, Solidago Foundation, and the Neighborhood Funders Group, along with many non-profits.

As we come to the end of Hispanic Heritage Month, we want to highlight two recent studies on Latinos in Chicago along with a relevant video. One study is an overview of where Latinos are in the city and the second is analysis of Latinos’ role in the Chicago economy. Both studies remind us of the important role that Latinos play in the Chicago landscape. The video reminds us how important it is to respect immigrants in our city.

In October 2017, the Chicago City Council Latino Caucus, headed by Alderman Gilbert Villegas, released a report by the Institute for Research on Race and Public Policy and the Great Cities Institute.  The report was produced for the Metropolitan Family Services.  The Latino Neighborhoods Report: Issues and Prospects for Chicago, authored by José Miguel Acosta-Córdova, provided city wide data on Latinos and more detailed information on the variation among 12 neighborhoods with at least 25,000 Latinos and where they were the largest single group. In addition to the detailed information that is useful to policy makers, researchers and social service delivery agencies, the report highlights ways to respond to educational and employment needs of a group that is 30 percent of Chicago’s population.

Difference between Latino and non-Hispanic White Median Household Income by Community Area, 2011-2015

In recognition of Latinos in Chicago, we are also making available Acosta-Córdova’s Spring 2019 thesis entitled, Lower Wages and Continued Occupational and Industrial Segmentation of Latinos in the Chicago Economy in which he updates a 1993 study by John Betancur, Teresa Córdova and Maria de los Angeles titled “Economic Restructuring and the Process of Incorporation of Latinos into the Chicago Economy.” In the original study, the authors argued that understanding how Latinos were incorporated into the Chicago economy since the early 1900s provides understanding of the Latino experience in the region.  Simultaneously, their experience also reveals dynamics of economic restructuring that began hitting the region in the mid 1970s.

Given changes since 1980, Acosta-Córdova returns to the study to pick up where the previous authors left off and asks whether occupational and industrial segmentation and lower wages continue to characterize the experience of Latinos in the Chicago economy.  Indeed, despite some progress, Latinos in Chicago continue to serve as a source of low-wage labor and “were it not for the influx of Latino immigrants, many industries that have grown or remained in the area since would not have found the labor to do it.”  Acosta-Córdova concludes, “Latino labor has helped transform Chicago from an industrial metropolis into a modern day, service-based metropolis. One could argue, Latinos saved Chicago’s economy” (p. 88).

Beyond the boundaries of Chicago, we know that Latinos are interwoven into U.S. society and economy. It is therefore both ironic and inaccurate, that Latino immigrants, especially Mexicans and Central Americans, are scapegoated for the woes of the economy. This misplaced blame is especially evident in current U.S. policies at the border. We thought that this would also be a good time to repost the video from September 28, 2018 forum co-sponsored with the Center for Global Health and the Global Migration Working Group of UIC’s Institute for Humanities on Deportation and Detention: Addressing the Psychosocial Impacts of Migrant Youth and Families. The sixteen immigration experts who spoke at the forum provided deep insights on the inhumane practices against immigrants that continue to have reverberating impacts. Each of the speakers reminds us of the fundamental importance of human rights and dignity.

Through our work at the Great Cities Institute, we often partner with others to seek solutions to pressing urban issues. Please join us here at GCI on Wednesday morning, October 16^th to hear from our friends from the Basque country who will talk about their effective and holistic approach to manufacturing and building a cooperative economy.