Retail Sector Adding Jobs, but Not Always Careers
By Ellen Gibson
Erin Abell left a job in finance to volunteer for John McCain's presidential campaign in early 2008. She had hoped to return to the industry after the election, but by then Wall Street was on life support, and Abell had to live off credit cards until joining a friend's start-up.
So she started working part-time at Banana Republic to help cut her debts. Yet Abell was paid less at age 30 than she made in a retail job in her early 20s. She also says she had to promote high-interest credit cards and sometimes work until 1AM.
"Management made it very clear they could replace you tomorrow," Abell says.
As the economic recovery gains steam, the retail industry is expected to be one of the strongest for job growth this decade. But the quality of jobs selling clothes, computers and other goods has declined in recent years to the point where few can be classified as careers.
Erratic part-time hours often make a second job impossible and complicate the work-life juggle. Pay has shrunk. And the recession created hordes of overqualified job seekers, leaving existing staff with little power to demand better conditions.
With unemployment still high at 8.8 percent, many people feel fortunate to land any job. But not all jobs contribute the same to economic growth. Employers may be hiring more, but they are hiring disproportionately in retail and other service-sector positions with low wages and few benefits.
High-paying fields like real estate and finance accounted for 40 percent of the 8.8 million jobs lost from January 2008 to February 2010 but only 14 percent of the jobs created in the year that followed. Lower-paying industries like retail constituted 23 percent of jobs lost but almost half of the recent growth.
This shift "could make it much harder for workers to find family-supporting jobs," says Annette Bernhardt of the National Employment Law Project, who analyzed the data. Even in the "jobless recovery" after the 2001 recession, high-paying industries accounted for nearly one-third of new jobs in the year after the recession ended.
Elizabeth Murphy, a recruiting manager for Crate & Barrel, says she's receiving three times as many applications as she did a year and a half ago. The increase reflects, in part, a surge in applications from unemployed real-estate agents, accountants and other professionals.
"In the past, college grads would say, 'I won't even talk to you if you're paying less than this,'" Murphy says.
Stores are under pressure to trim their expenses, and labor, the biggest expense after inventory, is one of the few costs they can control. In 2006, the median hourly wage for retail salespeople was $9.50, the government says. In 2009, the most recent year for which figures are available, that figure was $9.74 -- a 4 percent drop after adjusting for inflation and more than $5 less than the U.S. median for all occupations. For full-time retail workers, the median annual wage was $20,510 -- half made more, half less. That's well below the federal poverty line for a family of four.
The trend is evident in the broader economy. The government's March unemployment report showed that after adjusting for inflation, wages are falling - one reason spending growth has been slow.
Retail workers aren't just teenagers seeking pocket money. Much of the industry's work force depends on the income for their livelihood, says James Parrott, chief economist at the Fiscal Policy Institute. In New York City, for example, 78 percent of retail workers are 25 or older, and more than a third are their family's sole provider, Parrott found.
Three of the six occupations expected to grow the most by 2018 are customer-service representatives, food-service workers and retail salespeople, according to government data. Retail is expected to create twice as many positions as software and computer-application engineering.
The sector's largest employer, Walmart, already accounts for 1 percent of all U.S. workers. Critics, though, say the company skimps on pay. Last year, Ohio state Rep. Robert Hagan, a Democrat, calculated that Buckeye State taxpayers spend roughly $67 million a year on food stamps and Medicaid for Walmart employees.
Spokesman Bill Wertz says the store offers competitive wages and benefits and every day "helps people move off unemployment rolls."
At Walmart and across the country, retail workers are finding it harder to get by, especially lately, because of higher food and gas prices.
Connor Skyggen, a recent college graduate who worked full-time in a Macy's jewelry department last year, says his average take-home pay was $240 a week. He had to spend some of that on suits, pressed shirts and shoe shines to meet the dress code.
On what was left, "it's really hard to support yourself," he says.
Not every retail employee is struggling. At Nordstrom Inc. stores, commissioned salespeople are highly trained, and top performers earn six figures, says spokesman Colin Johnson. But electronics stores that offer workers a cut of sales, like hhgregg and P.C. Richard & Son, have had to lower prices to compete with Amazon.com, squeezing staffers' take-home pay.
"As electronic goods essentially turn into commodities, the commission model is not viable," says Chris Tilly, who directs the UCLA Institute for Research on Labor and Employment. The Internet has armed consumers with so much price and product information that stores now need salespeople more to sell extended warranties than to explain how products work.
Advances in technology have helped stores optimize workers' schedules, too, so they have more workers on duty during peak sales times without being overstaffed during lulls. But one consequence is inconsistent work schedules for the employees. And workers complain that computers don't weigh factors like seniority or a lengthy commute.
Sheena Dixon, 26, a former theft-prevention manager at a Target in New York, said her store "used scheduling as a weapon," shuffling hours so it was difficult to take a second job or make personal plans. If the store called on a day off and you declined to come in, your hours were slashed, she says.
Dixon left the company in January to pursue a real estate career. Target spokeswoman Molly Snyder says scheduling was "thoughtfully crafted to provide flexibility for our team members and excellent service to our guests."
High-turnover work forces mean retailers must spend money to recruit and train. Yet those expenses pale compared with the cost of providing benefits, analysts say. The new federal law meant to expand health insurance coverage could make full-time hours even harder to get. Companies will be penalized for not providing insurance -- but only for employees who work at least 30 hours.
Securing a promotion, meanwhile, is already a challenge. When Caitlin Kelly's newspaper laid her off, there were few job options for a 50-year-old reporter. So in August 2007 she took a part-time job at a North Face store in suburban New York.
Kelly says she consistently beat her sales targets and regular customers asked for her by name. But when an assistant manager position opened up, she says, she was denied an interview.
Some stores prefer not to promote from within, believing homegrown managers won't command as much respect from sales-floor workers, says Nikki Baird, an analyst at retail research company RSR. To move up, you often have to be willing to move. What Kelly found most dispiriting, as she writes in her forthcoming book, 'Malled,' is that no one ever solicited ideas from her or other staffers.
"The people on the sales floor have tremendous knowledge, but the company presupposed we're stupid," Kelly says. "I would know the minute I unpacked a box whether [it] was going to sell."
The North Face, which sells outdoor gear like all-weather jackets and backpacks, declined to comment.
Analysts say overlooked staffers are a problem endemic to the field. Retailers track each purchase to guide marketing and inventory. Yet they make little effort to determine why some staffers are more productive. At most companies surveyed by the National Retail Federation last year, customer-service scores didn't affect sales associates' pay.
"Better-performing associates drive sales," Baird says. "But it's hard to do that analysis to say, 'Sales were up this week because we had all our A players.'"
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