Racial and ethnic minority employees constitute a significant proportion of the U.S. workforce. The literature on demographic similarity in the workplace suggests that the proportion of co‐workers who share the same racial/ethnic background (racial/ethnic similarity) can influence job attitudes and employee well‐being and that the reactions to racial/ethnic similarity may differ between the racially dominant and subordinate groups. This study applies status construction theory to examine the extent to which racial/ethnic similarity is associated with job satisfaction and lumbar back health among warehouse employees. We surveyed 361 warehouse workers (204 whites, 94 African‐Americans, and 63 Latino workers) in 68 jobs in nine distribution centers in the United States. Multilevel analyses indicate that white and racial/ethnic minority groups react differently to racial/ethnic similarity. For job satisfaction, white employees experience higher job satisfaction when they are highly racially/ethnically similar to their colleagues, whereas Latino employees experience higher job satisfaction when they are racially/ethnically dissimilar to others. As for lumbar back health, among Latino and African‐American employees, higher racial/ethnic similarity is associated with better lumbar back health whereas for white employees, the association is the opposite. Across all groups, moderate levels of racial/ethnic similarity were associated with the best lumbar back health. Copyright © 2013 John Wiley & Sons, Ltd.