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Do you have the feeling that it's getting harder to find a salesperson when you walk into a store these days? There you are, credit card in hand, ready to spend, and it seems like the harassed worker is always off helping someone else, or restocking the shelves, or running back and forth between the cash register and the back room.
And you're not just imagining things. Retailers have fewer workers than they did a year ago, according to the latest numbers from the Bureau of Labor Statistics. Meanwhile, shoppers keep filling the malls, with retail sales up by 8% over the same period. No wonder it's so hard to get someone's attention.
True, the drop in retail employment over the past year is not very big -- only 13,000 workers, or 0.1%. But it's very unusual to see the decline come at a time when employment in the rest of the economy is rising. Historically retailers hire when overall jobs are expanding. Yet this time around, they are being very cautious.
E-COMMERCE BOOM. In fact, based on historical precedent, U.S. retailers should have added 240,000 jobs or so over the past year, more than enough clerks and cashiers to keep the lines moving and the shoppers happy. Incidentally, that sort of hiring would have pushed down the unemployment rate to as low as 4.4%, from its current 4.6%.
So what's going on here? In part, the decline in retail employment may reflect the rapid growth of online retailers, which have much higher sales per worker than their brick-and-mortar counterparts. E-commerce sales are up by 25% over the last year, to $25 billion. That's a lot of purchases that no longer need in-person sales assistance.
Still, that's not enough to explain most of the weakness in retail hiring. E-commerce gets a lot of attention, but it still amounts to less than 3% of total retail sales.
STAGNANT RETAIL WAGES. Another possibility is that retailers want to hire but they just can't find enough people who want to be on their feet and deal with difficult customers all day for low pay. Indeed, it's not hard to find stores with help-wanted signs in their windows.
But if retailers were really serious about adding more workers, we'd expect to see retail wages rising -- and that's not what is happening. Hourly earnings in retailing went up by a only a measly 13 cents over the past year, for a 1% gain. That's way less than the 3.5% increase in hourly earnings for the economy as a whole.
The third possibility is that the decline in retail employment is warning us of an impending economic slowdown. There is a precedent for this sort of prescient behavior. In late 1989 and early 1990 retailers sensed economic weakness and turned cautious, reducing hours and holding back on hiring. This turned out to be an advance sign for the recession which started in July, 1990.
There is some evidence the same thing might be happening this time. Retail employment peaked last summer, and then stayed relatively strong through the holiday season. In the past few months, though, retail jobs have dropped sharply, suggesting that retailers are seeing some signs of consumers pulling back.
Of course, if there is a general economic slowdown, consumers will have less money in their pockets, and the shortage of sales help won't be such a big problem. But for now, take your running shoes and be prepared to chase down that salesperson.
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