Help Wanted NSGA Jan/Feb 2022
The sign in the store window reads: Help Wanted-Please Apply or Now Hiring-Join our Team or some variation of those words all with the same urgent plea…we need help and we need it now!
As of September the labor force participation rate stood at 61.5% down from 63.3% pre-Covid according to the U.S Bureau of Labor Statistics. That reduction amounts to about 4 million people currently NOT in the labor pool. It isn’t difficult to understand why retailers (and other businesses) are having such a difficult time finding people willing to work when you break it down. Clearly there are plenty of jobs available but few interested takers. And it’s not just retail. A growing number of folks today simply don’t want to work—period.
Retail Demand vs. Labor Supply
According to Craig Johnson founder of retail advisory group Customer Growth Partners “the growth in demand for retail services…has been far stronger than the growth in the supply of labor needed.” There has been a sales increase of nearly a 14% increase in general merchandise apparel and food purchased for consumption at home—not including gas cars and restaurants—from January to September of this year compared to the same time in 2020. When you couple this with the fact that there are roughly 4 million fewer people in the labor pool logic would indicate that things are out of balance.
Challenges in Hiring
Most people understand why retail sales are up sharply this year even given the continuing supply-chain issues. What many retailers are scratching their collective heads over is why they can’t find and keep good help—any help. Some of the reasons include:
- Government aid
- Continued concerns about Covid-19
- The so-called “underground economy”
Initially some folks found that they were better off financially by simply choosing not to work.
Others were forced out when faced with the lack of child care options. With regard to Covid-19 considerations some voluntarily left the workforce due to mandatory vaccination requirements from some companies or even mask mandates.
Another contributor is the ever-growing cash economy. If someone is working and being paid in cash those figures do not show up on the government statistics. In many instances those “cash” jobs pay more than retail can and the recipients are still eligible for stimulus checks since the government has no visibility to this segment of the workforce.
The agriculture sector and in particular the continued growth of marijuana is a significant contributor. “The estimates are that the underground economy is 7-8% of the total economy.” With the retail sector being the single largest employer in the country it’s easy to see how the labor shortages affect the industry.
The Ripple Effect
Johnson mentioned earlier estimates that retail accounts for about 25% of all jobs. “According to the U.S. Department of Labor Statistics of the 154 million people working across all sectors in 2020 approximately 14.9 million were in-store retail workers. Another 5.6 million worked in wholesale and 5.5 million in transportation and warehousing.”
What this means is longer lines at stores fewer workers to help customers longer delivery times and less products on the shelves. Recent data for October had retail sales up 1.7% even given the issues being discussed. The main driver appears to be early Holiday shopping due to concerns over product availability.
Solutions
It would seem logical that the easy remedy for labor shortages assuming the issue truly is one of supply and demand would be to increase the base pay. In some instances this works but not in all. Hiring bonuses have also been used to entice workers as well as flexible hours.
Labor Force Trends
According to recent U.S. Dept. of Labor Statistics by 2030 9.5% of the civilian labor force is projected to be over the age of 65. The report goes on to say that “not only is the share of older people in the labor force growing but their labor force participation rates are rising.” The increase in older workers is driven by healthier better educated baby-boomers with a longer life expectancy. They have chosen to continue working out of financial necessity or merely for something to do part time.
Opportunities for Retailers
Retailers might be well served to focus their recruitment efforts on this segment of the population. This group tends to be hard working and reliable. In other words they show up for work when scheduled and rarely ask for time off.
Challenges and Solutions
Most retailers tend to gravitate toward younger people to fill the scheduling voids on the selling floor. Since this isn’t always possible these days other options need be considered. For the sporting goods industry the hiring gap for certain sports say hockey for example might be mitigated by considering adult-league players retirees or even hockey moms.
Case Study: Hockeywolf
I spoke with NSGA member Traver McLeod owner of Hockeywolf with locations in Montana and Washington. McLoed is finding success using program directors and coaches as well as hiring older employees citing the fact that they tend to be more stable and service oriented. He also mentioned that he is able to accommodate older workers with four-hour shifts versus the typical eight hours which has helped to fill the schedule.
Ritchie Sayner
Summary
The article discusses the current labor shortage in retail highlighting the decline in labor force participation since the COVID-19 pandemic with 4 million fewer people in the workforce. Factors like government aid COVID-19 concerns and the underground economy contribute to the scarcity of workers while solutions such as increasing wages and targeting older workers are explored. The retail industry faces challenges like longer lines and fewer products but opportunities exist in recruiting reliable older workers and leveraging community connections.
“The growth in demand for retail services…has been far stronger than the growth in the supply of labor needed.” – Craig Johnson
Real-World Examples of Labor Challenges and Solutions
The following examples illustrate how different sectors are experiencing and addressing labor shortages as discussed in the article.
- In the hospitality industry many restaurants and hotels have increased wages and offered signing bonuses to attract workers. Despite these efforts some establishments have had to reduce their operating hours due to insufficient staff.
- In the agricultural sector particularly in states like California there has been a reliance on undocumented workers paid in cash which contributes to the underground economy. This has made it difficult for official statistics to accurately reflect labor market conditions.
- Retailers such as Walmart and Target have started targeting older workers for recruitment offering flexible part-time schedules to accommodate their needs and tapping into a demographic that is often more reliable and experienced.
