Generally speaking, the U.S. economy is in pretty good shape. And that’s making it hard for retailers of all sizes to hire the right workers for a variety of roles—in stores, distribution centers and call centers—and to keep them once they are in place.
Take W.W. Grainger Inc., the supplier of maintenance, repair and operating products, which wants to hire about 2,500 employees a year to work in its 13 distribution centers, 250 branches and three main contact centers. Filling every one of those roles is crucial to its success, but doing so has become difficult over the past few years, says Andrew Face, the retailer’s vice president of human resources. “It’s increasingly challenging to recruit and retain team members for the different shifts and skills that we need,” he says.
The reason is simple: It’s a good time to be a worker looking for a job. Prior to the 35-day partial federal government shutdown, the December U.S. unemployment rate was 3.9%, which was near a record low (the rate rose to 4.0% in January thanks in part to the shutdown). After years of stagnant wages, employers have been forced to boost workers’ pay to attract and retain employees; many merchants have increased starting pay this year and 34% of retailers gave wage hikes to their existing employees to put their salaries on par with increased starting wages, according to a recent survey of 53 merchants conducted by Korn Ferry, an organizational consultancy. Overall, the median base pay for full-time workers across all sectors increased to $52,863 per year in December, up 2.3% from a year earlier, according to Glassdoor’s “Local Pay Reports,” outpacing the 1.9% inflation rate. And the average hourly earnings in December rose 3.2% year over year, according to the U.S. Bureau of Labor Statistics.
That’s created ripe conditions for workers—across a broad spectrum of positions—to feel secure leaving their current employers. For example, 29% of retailers in the Korn Ferry survey have seen an increase in employee turnover since January 2018. And the median retail distribution center turnover rate rose to 32% last year, a four percentage point increase from 2017, according to Korn Ferry. That means nearly one in three distribution center employees left their jobs last year.
At the same time, a number of retailers, eyeing promising market conditions, are looking to hire more workers. Prior to the partial-government shutdown, consumer confidence—a key indicator that helps drive retailers’ hiring decisions—was soaring with the University of Michigan’s U.S. consumer sentiment in 2018 posting its best year since 2000. Partly because of those trends, retailers hired 576,800 seasonal employees in November and December, according to the National Retail Federation’s analysis of U.S. Bureau of Labor Statistics data. Beyond seasonal workers, the retail industry added 15,200 jobs in December alone. While those figures (which understate retailers’ seasonal hiring because they don’t include some positions, such as warehouse workers or those who work in information technology) were strong, they were actually down from 582,500 jobs in 2017, as well as lower than NRF’s October forecast that temporary holiday employment would total between 585,000 and 650,000 jobs. That shortfall was thanks to the tight labor market, says Jack Kleinhenz, NRF’s chief economist. “Retailers would have been happy to hire more seasonal workers, if they could have found them,” he says.
The issue extends far and wide. Finding people to work in distribution centers, answer customer service calls and chats, and check shoppers out in stores is a problem that isn’t getting any easier to resolve, particularly as more workers switch jobs to get higher wages, more benefits and other perks that retailers and other employers are using to attract employees.
“Jobs are going unfilled,” says Craig Rowley, senior client partner at Korn Ferry. “Retailers need to figure out how to appeal to prospective employees.”
Few, if any, retailers are immune from the challenges. Even retail giants, such as Amazon.com Inc., Target Corp. and Walmart Inc., have felt pressured over the past few years to boost wages and offer other perks to lure new workers…
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