Facing one of the tightest labor markets in living memory, US retailers and other companies staffing up for the holiday season have had to get creative about finding and attracting the extra workers they need for the seasonal rush. Some retail chains started hiring for the winter holidays all the way back in the early summer, raised entry-level wages for store employees, and offered a variety of bonuses and perks like store discounts.
The retail sector was already feeling pressure to bump up pay, the Star-Tribune reported this week, citing a survey by the hiring platform Snag that found retailers expected wages to rise by 54 percent this year. That’s partly a product of a labor shortage, but also reflects the growth of online shopping:
As more shoppers order online and opt to have items shipped to the store or their front door, retailers’ backroom operations are changing. Mass merchants still need cashiers, salespeople and shelf stockers. But they need more people to package orders for store pickup and to work in warehouses and distribution centers, which increasingly requires more technology skills.
Target is doubling the number of staff it needs to handle digital orders. Macy’s, which is hiring about the same number as last year, will shift its mix and add 5,500 more people for its fulfillment centers. Best Buy says it, too, will bulk up on workers to package up online orders.
Labor market competition, the need to attract and retain more skilled employees, and “HR-as-PR” considerations are all coming to bear on retailers’ decisions to raise pay for their hourly employees. They are also courting hires with new benefits, including intangible benefits like flexibility, Steve Bates notes at SHRM:
On Tuesday, October 2, Amazon announced that it would raise its internal minimum hourly wage for US employees, including part-time workers and those hired through temporary agencies, to $15 an hour. This includes workers at the company’s warehouses or “fulfillment centers,” as it calls them, in addition to store employees at Whole Foods, which Amazon acquired last year. The e-commerce giant also said it planned to lobby the US government to raise the federal minimum wage from its current hourly rate of $7.25, last updated in 2009, the New York Times reported:
The new wages will apply to more than 250,000 Amazon employees, including those at the grocery chain Whole Foods, as well as the more than 100,000 seasonal employees it plans to hire for the holiday season. The change will not apply to contract workers. It goes into effect on Nov. 1. “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” Amazon’s chief executive, Jeff Bezos, said in a statement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
The move came amid growing pressure on Amazon from the media and politicians regarding its pay practices and the work conditions of its lowest-paid employees, particularly those at its warehouses or “fulfillment centers.” Vermont Senator and former presidential candidate Bernie Sanders has been an outspoken critic of Amazon’s CEO Jeff Bezos, who is currently estimated to be the wealthiest individual in the world, citing news reports that large numbers of Amazon’s low-wage employees were dependent on public assistance. Sanders and California congressman Ro Khanna have been pushing legislation that would require companies to compensate the federal government for the cost of public assistance benefits received by their employees, including food stamps, Medicaid, and public housing.
The next day, however, Bloomberg reported that Amazon was cutting monthly bonuses and stock awards for hourly employees to help offset the costs of the minimum wage hike. Still, the company insists that these workers’ total compensation is rising:
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The latest compensation data from the US Labor Department’s Bureau of Labor Statistics show that total compensation for US employees has increased modestly over the past year, from $35.28 per hour worked in June 2017 to $36.22 per hour worked in June 2018. Wages and salaries averaged $24.72 per hour worked and accounted for 68.3 percent of these costs, while benefits averaged $11.50 and accounted for 31.7 percent. For private sector employees, compensation has increased from $33.26 per hour worked to $34.19. Wages made up $23.78 or 69.6 percent of that figure, while the remaining $10.41 (30.4 percent) consisted of benefit costs, in which the BLS includes supplemental pay.
While the percentage ratio of wages to benefits was unchanged from June 2017, benefit costs grew at a slightly higher rate than wages year-over-year, nearly 3 percent compared to 2.7 percent. This reflects a nearly 12 percent increase in bonuses and other forms of supplemental pay, from $1.18 per hour to $1.32; supplemental pay made up 3.8 percent of the total compensation mix in June 2018, compared to 3.5 percent a year earlier. Paid leave, including vacation time, also increased slightly.
Taking a longer-term view, over the past five years, benefit costs for private-sector employees have increased by over 20 percent, from $8.64 per hour worked in June 2013; whereas wages and salaries have increased 16 percent, from $20.47 that month. Supplemental pay, by comparison, has increased 65 percent from 80¢ per hour worked in June 2013. This trajectory reflects the increasing tendency we’ve observed among employers in recent years toward variable pay schemes that reward employees for high performance with one-time bonuses rather than standard annual raises.
The holiday hiring season is already in full swing in the US and the number of seasonal workers hired this year is expected to grow, according to a new forecast from Challenger, Gray & Christmas, citing year-to-year trends and announcements retailers have already made this year:
Last year, seasonal retail employment increased by 668,400 during the final three months of the year, 4.3 percent higher than the 641,000 jobs added in 2016, according to employment data from the Bureau of Labor Statistics (BLS). … Last year, BLS data showed that transportation and warehousing employment increased by a non-seasonally adjusted 279,700, up 13.4 percent from the 246,700 workers in the final quarter of 2016 and 6.6 percent higher than the 262,300 workers hired in this sector in the final three months of 2015.
Companies in this sector are averaging 5.2 million workers this year, compared to 4.9 million in 2015 and 4.2 million in 2008, according to non-seasonally adjusted BLS data.
Challenger points to several companies that have announced they will hire as many holiday season employees as last year or more: Macy’s announced this week that it planned to hire 80,000 seasonal workers, as many as it planned to at the start of the 2017 season (it ultimately hired 87,000 last year). FedEx announced plans for 55,000 holiday hires, a 10 percent increase over last year’s number, and said it would also increase hours for some current employees. The big-box retailer Target, meanwhile, said on Thursday that it would hire around 120,000 seasonal workers for the holidays, 20 percent more than last year, while also raising starting pay by $1 per hour, the Star-Tribune reported:
In the past three years, the number of US employees willing to go above and beyond their employers’ expectations at work has fallen by 10 percent, from 27 percent in the second quarter of 2015 to 17.8 percent in Q2 of 2018, the latest data from Gartner’s Global Talent Monitor shows. Globally, employees’ confidence in business conditions has fallen for the first time since Q1 of 2016.
One possible driver of employees’ declining levels of discretionary effort is a lack of satisfaction with opportunities to grow and develop in their careers. Nearly 40 percent of employees in the US and globally ranked a lack of future career opportunities as their main source of dissatisfaction in a previous job, displacing compensation as the number-one driver of attrition both in the US and around the world. Over the past few years, we have seen development opportunity grow to be an increasingly critical element of the employee value proposition, both as a driver of attraction for new employees and, in its absence, as a reason for quitting.
“With recent U.S. reports showing little growth year over year in real earnings, workers hope to achieve more satisfaction in their jobs through better titles and opportunities to advance and grow in their current careers,” Brian Kropp, group vice president of Gartner’s HR practice, said in a statement. “To prevent further reduction in workplace effort and to retain top talent, employers should pay closer attention to employee dissatisfaction about the lack of career opportunities, particularly if wage growth remains stagnant.”
“Leading organizations are able to use their employment brand to illustrate why their career opportunities are better than their competitors,” he added. “A company’s EVP directly correlates to employee engagement levels, as workers are more likely to work harder and stay in their current positions if they are highly satisfied with their company’s EVP offerings. Gartner data shows that organizations with high levels of employee engagement report financial outcomes three times higher than firms with lower engagement levels.”
Unemployment held steady at 3.9 percent last month, while the US economy added 201,000 jobs, according to the August jobs report from the US Bureau of Labor statistics, released on Friday. The numbers of new jobs created in the previous two months were revised downward, however, by 248,000 to 208,000 for June and from 157,000 to 147,000 fro July—a total downward revision of 50,000.
Average hourly earnings rose by 10 cents to $27.16 in August, for a year-over-year gain of 77 cents or 2.9 percent. These numbers indicate that wage growth in the US may finally be accelerating again after years of stagnation despite a tight labor market, the New York Times reported:
Amy Glaser, a senior vice president at the staffing company Adecco, said she had noticed a significant change in employers’ willingness to increase hourly wages. “Now clients are talking in terms of dollars instead of cents for wage increases,” she said. During the busy holiday season, employees often jump from one business to another for an additional 50 cents an hour, Ms. Glaser said. Companies are trying to head off that exodus, she said, by starting seasonal hiring earlier — in August, instead of September and October — and by offering higher starting pay.
One sour note in Friday’s report, however, was that both the labor force participation rate and the employment-population ratio declined by 0.2 percentage points, to 62.7 percent and 60.3 percent, respectively. These figures suggest “an economy running awfully close to its capacity,” Neil Irwin observes at the Times’ Upshot blog:
The number of people in the US who relocated for a new job last year declined to 3.5 million from 3.8 million in 2015, the Wall Street Journal‘s Rachel Feintzeig and Lauren Weber reported on Sunday, citing census data. Even as the US population has grown, the number of relocations has been on a downward trend overall since the government began tracking this data in 1999. A new analysis from Challenger, Gray & Christmas looks back even further and concludes that the percentage of job seekers willing to move for new jobs has fallen dramatically since the late 1980s: Between 1986 (when Challenger began collecting data) and 1990, the average annual relocation rate was 35.2 percent, compared to just 11.3 percent on average between 2007 and 2017.
Various factors can discourage candidates from taking jobs that require them to move, experts tell Feintzeig and Weber at the Journal. One major variable is housing costs: If candidates can’t afford to live in the high-cost cities where jobs are abundant, they won’t take those jobs. The high rents and other costs of living in powerhouse cities like New York, San Francisco, Boston, and Los Angeles can make it difficult for Americans from less expensive parts of the country to move there, even for comparatively lucrative work. When real estate values are low, on the other hand, candidates may be reluctant to move if they own a home they can’t sell; this is why, when General Electric moved its headquarters from Fairfield, Connecticut to downtown Boston in 2016, the company offered to buy relocating employees’ houses if they were unable to sell them.
Beyond housing considerations, workers may be unwilling to move because they don’t want to disrupt the lives of their spouses or children. Dual-income families may hesitate to relocate when one partner gets a job offer in another city, if that means the other partner will have to quit a good job in their current location. Such a move often means temporarily losing household income earned by the second partner and might also depress their future earnings.