Photo: Nordstrom
Does retail have an answer for its jobs problem?
More retail workers quit their jobs in April than in any single month since the Labor Department started tracking the industry’s job numbers going back more than 20 years. This follows a year that saw a record number of layoffs and furloughs as a result of the havoc wrought on retailers by the outbreak of the novel coronavirus.
Around 649,000 retail workers gave their notice to employers in April even as the industry as a whole has been looking to add workers in an economy that is rebounding as large numbers of Americans get vaccinated against COVID-19.
Retail is not the only industry being affected by resignations although, along with hospitality, it had the largest numbers of worker departures. The Economist reports that preliminary data for April from the Labor Department shows that 2.7 percent of workers quit their jobs. The previous high was 2.4 percent.
The Washington Post reports that many former retail workers are leaving for better paying positions that offer greater benefits and work/life balance in a variety of other industries including jobs at banks, insurance agencies and marijuana dispensaries.
The median pay for all retail workers was $27,320 per year in 2020. The median pay for hourly workers was $13.13, according to the Labor Department. Challenges around child care and transportation, particularly lower income families, have also increased due to the pandemic, even now as much of society appears to be returning to some semblance of pre-pandemic normality.
Some high profile retailers like Amazon.com, Costco and Target have raised their starting wages to $15 an hour as their need for human resources have increased along with sales and shifts in consumer shopping behavior. Many other retailers fall well below this pay number while also falling short in other areas such as associate training and career development.
Others, such as Walmart, that pay starting wages below $15, have begun placing more workers in full-time roles with regular schedules while also upping investments in training and communicating potential career paths that would lead to higher compensation.
- Americans are quitting their jobs in droves – The Economist
- Retail workers are quitting at record rates for higher-paying work: ‘My life isn’t worth a dead-end job’ – The Washington Post
- Retail workers are fed up and rage quitting, and the tight labor market could help them score better pay and benefits than they’ve demanded for years – Insider
- Retail Sales Workers – U.S. Bureau of Labor Statistics
Discussion Questions
DISCUSSION QUESTIONS: Do you see the numbers of workers currently quitting retail jobs as symptomatic of a wider industry challenge? Will a continued loss of workers begin to materially affect the performance of individual retailers?
Poll
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Solution? Higher pay. Once the efficiencies of e-commerce (not yet), dark stores (not yet) and fewer leases start to hit the books, payroll should become more flexible. Besides, with physical brand expression becoming more and more important (fewer chances), the level of talent has to go up, and minimum wage just isn’t going to cut it like it did when you had 1,000 stores.
Retailing has always had a jobs problem, and the pandemic magnified it. I don’t think it’s a coincidence that the best performing retailers tend to have the best wages and employee programs. Not lip service and platitudes, but meaningful wages and programs that enable workers to earn a living wage and have a path to grow professionally. Retailers who ignore the trends in retail employment and fail to appreciate the true strategic value of an engaged and effective workforce will suffer the consequences.
Yes, retailers have many good answers to what they see as a labor crisis—if they’re willing to listen. The first answer: treat workers as retail experts (not fungible “staff”) in whatever specific role they play. Train. Make it more interesting. Stable, predictable schedules. Better pay and benefits. And use technology more intelligently to reduce touches and enable the newly empowered “retailers” to focus on customers, merchandising, and sales.
Companies that can’t afford to pay a living wage don’t have a viable business model. Moreover, as the digital rethinking of physical retail marches on, the skill bar for store associates is rising. Retailers can’t afford to just throw bodies at the situation or assume that minimum wage will be adequate. Recruiting workers is only one part of the equation. Retaining them is just as important to the bottom line and to the brand(s).
Retail’s jobs problem is easily fixed. Hire associates at a liveable wage, invest in training, empower them with communications tools, and watch them work their magic with customers. On a related note, the United States has a huge child care problem that it must address…
It’s hard to fathom why you’d get negative hits for those comments, Cathy, but I guess that’s the problem in a nutshell.
This is yet another COVID-19 accelerated trend. Why should someone take a risk for such low pay?
I had someone on LinkedIn tell me it was impossible for me to be a “managing partner” and really believe that pay was the answer, vs. more “determination” on the part of the workforce and ending any kind of subsidies. The conversation devolved quickly and that’s really unfortunate.
I can’t spend my life arguing over these things. People deserve a living wage. Period. I understand very, very well that the store business model does not really lend itself to higher wages, but there’s no way around it. I guess that’s why Walmart is giving self checkout a go, it frees up money for other workers. But I don’t think it’s going to do the job and support growth.
COVID-19 definitely taught many of us the lesson that life is short. We’re going to have to get very creative and innovative in our industry or people just won’t work in stores. Or DCs.
Retailers have always had the answer to their jobs problem. Retail is hard work, and minimum wage or slightly higher isn’t enough to attract quality employees – or any employees right now. The answer is simple, it just isn’t easy.
The hubris of considering associates replaceable cogs has to end. Telling people you reward initiative and people skills and then making them work alone for days on end kills that spirit and the cycle continues. Pay is a symptom, not the answer. People quit bosses, not companies.
Great line, doc!
Yes. While retail has longstanding issues with attracting and retaining workers, the pandemic made it worse.
Frontline workers resented taking health risks as essential players who kept stores open. Seeking better pay and safer work conditions, many looked beyond retail.
Although high turnover is a retail constant, it reduces retailers’ productivity and performance results. Taking care of workers, paying them well and earning their loyalty keeps retailers competitive among increasingly scarce talent.
With the rise in curbside pickup during the last year, the store associates had to do a lot more work, a lot different from what they are used to, dealing with a lot more stress. When all that additional effort is not compensated, they are bound to look for greener pastures. Solution? Ensure workers are compensated fairly based on the type of activities they are performing.
Too many retailers see their front line workers as a commodity. The pay is low, their hours are carefully tracked to avoid paying benefits and there are rarely any opportunities for advancement. To be surprised that these workers tend to leave when better opportunities come along is pure hubris. On the other hand, there are also retailers out there who are willing to pay more, offer benefits, and most importantly demonstrate that they value their store teams by offering career tracks and real opportunities for advancement. There are numerous examples of retailers who enjoy low turnover and where people have built careers and stayed with their companies for decades. It’s all about respecting your team and creating an environment where team members are valued.
Somewhere about the late 1960s the average retail job devolved into a part-time hourly gig for the young and inexperienced to earn a little pocket money. Before that, retail workers were highly valued company employees who were viewed by the retailers as instrumental in growing sales.
The current labor issue is not so much about wage (although people do want fair pay for their work), it’s more about the quality of the jobs offered. Given that retailers earn their greatest revenue at highest profit margins from repeat shoppers, and that the number one reason for lost customer loyalty is poor customer service, retailers should be highly invested in rethinking their entire employee dynamic. Having a smaller staff of well paid full time people who are invested in the welfare of the company, gifted at reading and serving the customer and actively engaged in company growth will do more to help a company grow its bottom line than any other investment.
From the day I graduated from college to this day, I have been involved in the department store industry, a chain of “head shops” (remember those?), and for the last thirty years speaking and consulting retailers along with my partner, Georganne Bender. This same employee problem has been on the agenda all these years. It actually comes down to employee involvement, training, and ownership of their responsibilities. Training cannot consist of a 15-page booklet, or a manager who is speaking to the troops (and wishes they could get out of it). Overall, the best we have seen is companies that create a sweat equity ownership environment where the staff have the ability to change and display products, and council management about what the customers are doing and saying in informal meetings of all their particular departments. Give me a staff that builds sweat equity and a feeling of ownership in any retail environment, and I will show you better performance and enhanced, longer employment periods. And yes, you will lose staff members because of salary issues. How many of us have left somewhere for greener grounds?
Ultimately this is about supply and demand. If there are fewer people willing to work for the salary and benefits offered, retailers will need to improve either or both of those things to improve the supply of labor. The working conditions and attitude of the company are also important in retention. If you treat employees as disposable then don’t expect great loyalty when it comes to their employment.
The wider challenge is that workers want to work better hours and would like higher pay. The pandemic has provided time off from retail jobs for workers to think about doing something different and addressing issues like pay that they have not considered so deeply as in the past. Continued loss of workers will affect customer service at retail locations. This trend will continue, but it will be addressed by retailers through work hour modifications or higher pay to get the number of employees required back under control.
Basic tenet – if you want good people, you need to treat them good. The definition treating them good has evolved over time and now includes but is not limited to a competitive wage, a regular schedule posted far enough in advance that it offers a chance for them to plan, a non-hostile work environment, and benefits. In many cases this means moving to more full-time positions. In other words: seeing employees as an asset, not an expense.
The retail sector has a major problem when it comes to reducing turnover and hiring and retaining quality employees. The solution to this problem is more complex than can be dealt with in a short post, so I will present two items:
This is one thing that Walmart is working very hard at doing. It is not all about the money.
There are going to be fewer employees. Programs in retailers that seem to be labor intensive are not going to be rolled out if they are not yet in place and other labor intensive programs are going to be seriously looked at to determine if they make sense or are possible going forward.
Retailers that cannot figure out how to staff their stores (higher pay) or say they can’t afford it are unlikely to survive. Walmart in my area is starting mid shift stockers and online pick up pickers at $17/hr now offering full time 40 hours with benefits.
Also for all the negative we hear about how Amazon treats its workers, their service still seems to be humming along just fine as far as my recent orders from them have gone….
Or, we can wait until September when those extended jobless benefits run out and see if that improves the situation … so far, reports from Texas and Florida say it has improved it somewhat, but still not 100%.
I also think some folks are going to make a decision to not work and just stay home and tend to family related needs. Child care is having the same labor shortage (or worse) as retail and when you add COVID-related concerns that come with using that service and do the hard math on cost of child care vs. wage being made from someone working 24 hours a week at a retailer, it is a pretty easy decision to just skip the child care and skip the work at the retailer and stick around with the kids instead.
Oddly, perhaps disturbingly—and to some, this may be a stretch—but I feel this problem is a lot like talking “homelessness” in urban settings. Being without a home is the terrible connection. But there are myriad ways, all difficult to comprehend let alone solve, that lead one to be “here.”
Working in retail may not be that awful. But it’s close; and can be rather soul-crushing. And then there are very different ways retailers view and disseminate their mission: for customers and staff. Sometimes—yes, more often—higher pay helps. (But that’s a lot like cities throwing money at a problem, without dealing with the details.) Meanwhile, more pay will assuredly mean the business expects more “business” to compensate. Which is left to staff (and higher item prices) to help increase. This frequently leads to pitting associate against one another (via sales goals).
Then there are operations that simply do not want staff as “individuals,” but merely as a work force. To protect property—and facilitate transactions not much differently from self-service checkouts. Why be personality driven, when your goods can be digitally monitored and transactions can exist without paid persons to make this happen? The list goes on.
Ultimately, this (including my inclusion of the homeless) is always about the haves vs the have nots; and how willing (or forced) are those “with” willing to give or allow the “withouts;” and realizing no big problem has one easy fix.
Retailers: Absolutely pay a living wage and stop whining about your thin margins. It’s a competitive business, so find better ways to compete!
But that’s not nearly enough. Spirit-killing work environments and systematic disempowerment of staff in the name of “efficiency” are not only dehumanizing HR policy, they rot your businesses from the inside.
There is a ton of academic literature that demonstrates why well satisfied workers deliver a far superior customer experience and fiscal outcomes. Satisfied workers are fairly compensated, empowered to perform their jobs well, and able to see how their daily efforts contribute to personal, customer, team and organizational success.
The alternative — treating workers as interchangeable cogs in the machinery — creates the chronic employee turnover that retailers and restaurateurs are complaining about. Since frequent hiring is very costly, do the math. Making your jobs more desirable could well be the path to superior overall performance and greater shopper esteem.
Retailers will have to re-vamp their people systems, programs, culture and compensation structures to change the previous default behavior of a high turnover disposable workforce. As this article shows, many have already made the move to invest in their people. Many still need to. I expect improved work-life balance initiatives, higher wages, improved benefits, career growth investment, and other provisions of caring that will be required to attract, develop, manage, and retain good talent.