There are almost 70% more job vacancies than in the pre-pandemic and 10% fewer people looking for work.
Here’s one more reason to shop earlier this holiday season.
For decades, seasonal holiday hiring was predictable, and the jobs were filled by people who needed extra money to buy gifts. This year seasonal jobs will be plentiful, but workers probably won’t be. Unemployment is high at the same time as a labor shortage.
Retailers are bracing for it.
Target gave out $200 “recognition” bonuses last week to 340,000 front-line workers, the sixth time it awarded store employees bonuses since the pandemic started. Walmart offers free college tuition to employees, including books.
And sign-on bonuses are being offered by 44% of retailers on Snagajob, which says it’s the largest platform for hourly work and counts almost all the top 50 U.S. retailers as clients.
Normally, that kind of offer to non-salary hires is inconsequential, said Mathieu Stevenson, CEO of Snagajob. “Now it is part of a strategy to not increase long-term costs with higher wages.”
Wages were up in the second quarter at the fastest annual rate in 13 years. Consumer spending was up in June, and while the personal savings rate has fallen slightly, it remained historically high at 9.4% in June.
Turnover rates have spiked, and voluntary quits are at an all-time high, leaving every employer trying to retain its workers, Stevenson said.
As the holiday season approaches, Stevenson said there are almost 70% more job vacancies than pre-pandemic levels and 10% fewer people looking for work. “That’s the greatest gap in recorded history,” he said.
The current holiday hiring environment is unprecedented, said Craig Rowley, senior client partner in Korn Ferry’s Dallas office.
More than half (51%) of retailers surveyed in July said they were having moderate trouble hiring store employees, and 36% said they’re facing significant challenges, he said.
The hiring crunch comes as retailers are forecasting a banner year. The National Retail Federation revised its forecast in June for retail sales to be up 10.5% to 13.5% to more than $4.44 trillion this year. Its prior forecast was for retail sales to increase 6.5%, about the same as 2020 when consumers shifted spending away from experiences, travel and eating out during the pandemic.
And it’s hard for smaller retailers to match the big-box chains, which have raised wages to $15 an hour, Rowley said. “Several clients are raising rates by at least $1 an hour.”
“Customers will see less service and notice more stocking of shelves happening during the day instead of at night, because it’s easier to get people to work 9-to-5,” he said.
Existing employees will be asked to work more hours, and store hours may not be as long as they usually are around the holiday season, Rowley said. “I’m encouraging everyone I know to shop earlier.”
A big reason holiday hiring will be a challenge this year is that people don’t need the money, Rowley said. Putting a pencil to a 10- to 15-hour-a-week job for six weeks comes to about $1,000. Families with two or three children will see that kind of extra money from the child tax credits that started in July, he said.
Many front-line workers are experiencing psychological burnout, Stevenson said, and they’re worried about their own safety, higher costs for child care and lingering concerns for at-risk family members.
Some experts see the end of federal supplement unemployment benefits in September as a turning point, but Stevenson said the payments have stopped in several states, including Texas, and there have been no big changes in the labor supply.
He believes traditional white-collar job benefits, such as tuition and bonuses, will continue to be offered to hourly workers. Store operations need workers who can advance, and hourly workers need to see a clear career path, he said.
Many retail executives started out as seasonal workers, and seasonal jobs have long been touted as a path to a permanent one.
The gig economy that expanded along with the rise in on-demand services seemed to have a leg up on retail hourly jobs for a while, but those jobs aren’t for everyone.
“I’m always amazed at a retail store environment, especially at a grocery store,” Stevenson said. “It comes with a sense of family that doesn’t exist in a gig job.”
His advice to workers: “If there’s a dream retail job for you, this is the time to apply. Employers need you.”