Retailers’ holiday hiring headache just got worse

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Retailers’ holiday hiring headache just got worse

By Louisa Hallett - 10/05/2018
The national unemployment rates just hit the lowest level since 1969 (you read that correctly) and that isn’t necessarily good news for retailers.

The national unemployment rates sank to 3.7 percent in September, exacerbating retailers' already difficult challenge of finding large numbers of employees to fill seasonal jobs. The previous month's unemployment rate was already low at 3.9 percent so the decline to 3.7 percent was not seen as a particularly favorable sign because it will be that much harder to fill temporary jobs at a time when they are needed most. Further compounding the challenge is Amazon's announcement in late September to increase its starting minimum wage to $15 a hour.

Amazon will begin paying a $15 an hour minimum wage beginning Nov. 1, creating new challenges for competitors as they look to allay heightened criticism and recruit thousands of works ahead of the holidays. The move will affect the roughly 100,000 seasonal holiday employees Amazon intends to hire this year along with 250,000 other workers, including part-timers and those hired by agencies. Amazon currently has 575,000 employees.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon Founder and Chief Executive Officer. “We’re excited about this change and encourage our competitors and other large employers to join us.”

The move comes as Amazon, other retailers and major carriers such as UPS and FedEx attempt to fill hundreds of thousands of seasonal jobs in an extremely difficult labor market. The national unemployment rate is below 4 percent which means most people who are willing and able to work already have a job. As a result there is increased competition for capable and dependable workers to fill additional positions which virtually guarantees that many retailer jobs will go unfilled at a time when they are needed most. The move by Amazon only makes the situation more challenging for other retailers who may lack the resources to absorb increased labor costs, a calculus Amazon surely understands even as it characterizes the wage hike move as taking a leadership position.

"I think we can safely ignore the decline from August because that was largely the result of the aftermath of Hurricane Florence, which affected both the retail sector and leisure/hospitality,” NRFChief Economist Jack Kleinhenz said. “More importantly, we know we have a large number of unfilled retail jobs with a record level of openings in the industry.”

Retailers had 835,000 unfilled job openings as of July, Kleinhenz said. September’s numbers followed a revised monthly gain of 8,900 jobs in August over July, which had originally been reported as a 9,700-job loss. The three-month moving average in September showed a loss of 5,000 jobs.

Economy-wide, average hourly earnings in September were up 8 cents over August and 73 cents from a year ago, a year-over-year increase of 2.8 percent.


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