Fri November 4, 2011
Stores May Be Slow To Hire For The Holidays
The latest jobs report shows the U.S. economy is continuing to grow. But the pace is slow enough to suggest the holidays may not be very bright, especially for people seeking seasonal work.
Employers added a total of 80,000 jobs last month — about half the number needed to keep pace with population growth and begin pulling nearly 14 million job seekers back into the workplace.
The Labor Department report released Friday did offer a little good news: The unemployment rate dipped to 9 percent in October, down from 9.1 percent. And September's job-creation total was revised upward to 158,000, from 103,000.
But in general, the October results were seen as mildly disappointing. And in the retail sector specifically, the numbers were flat-out frustrating. Last month, retailers added only 17,800 jobs, down considerably from the 26,300 they hired in the same month last year.
Asia Vick, a 21-year-old mother who has been searching for a retail job in Washington, D.C., says she is becoming discouraged. "You wait and wait and wait, and nobody gets back to you," she says.
The National Retail Federation predicts retailers will hire a half-million additional workers to staff stores in November and December. That would be about the same number as last year. Hiring is much better than the dismal years of 2008 and 2009, but still well below pre-recession levels. In 2007, retailers added 637,000 workers for the holidays.
Retailers are doing their hiring now as they prepare to keep store doors open longer in coming weeks, hoping to attract more customers. For example, Macy's already has announced most of its 810 stores will open at midnight on the Friday after Thanksgiving — four hours earlier than in recent years.
Target Corp. says it too will drop its usual practice of opening around dawn and instead will start selling at midnight on the Friday after Thanksgiving. Other big chains are planning similar supersized shopping hours, so they must hire and train staff now.
But even as they staff their stores for longer hours, merchants need to keep employee ranks as thin as possible to help profit margins. The retail association estimates seasonal sales will be up only 2.8 percent this year, far weaker than last year's 5.2 percent growth spurt.
And even that lackluster growth projection may be too optimistic. On Thursday, the International Council of Shopping Centers, another trade association, said that in October, same-store sales for clothing shops were flat — the worst performance since March.
The disappointment was not limited to apparel. The ICSC said department, luxury and discount stores all posted smaller year-over-year gains in October, compared with September. That is not a promising trend line, economists say.
"Consumer confidence is at recession levels, real disposable income growth is poor, and there is little hope for a near-term pickup in housing market activity," Erik Johnson, an economist with IHS Global Insight, wrote in his analysis of the ICSC data.
"Many Americans are living paycheck to paycheck, and the middle-class is having a hard time making ends meet," he wrote, adding that retail sales seem likely to slow further as the year winds down.
Even if consumers do perk up, it may not do much for hiring at malls and "big box" stores. That's because more shopping is shifting to the Internet. This year's hot gifts are expected to be electronic readers and tablets, as well as smartphones. Those items are often purchased through websites such as Amazon and Apple.
The increasing ease of online shopping, combined with the free shipping typically offered at this time of year, is widely expected to attract more customers this year. As a result, more of seasonal hiring will shift away from stores and toward warehouses and delivery companies.
FedEx says it will hire an additional 20,000 seasonal workers, an increase of 18 percent over last year. "Apparel, personal consumer electronics and luxury goods — as well as books and other items from large Internet retailers — will account for a large portion of FedEx holiday volumes," the company said.
Still, the job growth in the shipping industry is a sliver of what retail hiring used to be. The National Retail Federation says that back in 1999 — when spending freely at the mall was a national pastime and online shopping was rare — stores employed about 720,000 workers for the holidays.
Economists say that it's unlikely, even in a full recovery, that retailers would ever return to such high staffing levels, given the growth of online shopping and self-checkout technologies.