by Lauren Winans
The disappointing November jobs report saved its worst news for retailers. Even with the holiday shopping season in more or less full swing, retailers lost 20,000 jobs during that month. Meanwhile, according to credit card issuer Mastercard, retail sales over the holiday season — defined as November 1st through December 24th — rose almost nine percent over last year.
This means that there are still millions more retail positions out there than possible employees willing to fill them. Markets are supposed to find equilibrium, but today’s labor market looks more like a stuck pendulum, and with the unemployment rate touching four percent, it may not come unstuck anytime soon. Employers should not panic yet, but they do need to reevaluate everything right now.
An Increase in Pay is Not Always the Answer
The easy answer, whispered by the president himself months ago, is to raise pay, yet low wages are not necessarily the problem. Indeed, Pew Research recently found that retail wages rose an average of almost nine percent this year, the sixth highest of any employee class. Retail workers, like everyone else, are struggling to find joy in their jobs these days. This is obviously far more difficult to do if that job involves long hours, rude customers, and unpredictable peak times, coupled with new processes, new technology, and new job responsibilities — not to mention COVID.
The Great Reassessment
There has been a surge in early retirements and workers seeking jobs with more flexibility, but this has led the entire labor force participation, not just the retail industry, to decline. The workforce migration is clearly moving away from the “take what you can get” mentality and moving towards seeking positions that align with an individual’s lifestyle, values, and expectations. This has been noticed as The Great Reassessment.
Make no mistake — this is not transitory. Employee skills in hospitality, tourism, and retail are often not transferable to other industries, so if a business closes temporarily or permanently due to labor shortages, those able and willing to work may have difficulty finding work outside of their industry. Likewise, other industries will not have labor that easily transfers into public-facing jobs like retail.
Reevaluate Positions Before Hiring
Indeed, as disruptive, tedious, and painful as this labor market may be, this just is the kind of musical chairs we need to go through to ensure that the right employees are with the right employers over the long run. However, employers cannot just sit still and wait for the music to stop. Focus on what you can change and not what you cannot change. For example, business owners cannot change that there is a smaller pool of talented applicants and that the labor market is more competitive than ever, but you can change your workforce strategy, reviewing internal processes, and roles and responsibilities. You can determine if you really need to replace the employee that left the company or if their role still has a purpose. Reevaluating everything is what an employer can and must do right now.
Independent retailers can also leverage third party partners to handle specialty skills. Using consultants, freelancers, and contractors in smart, cost-efficient ways can help overcome short-term labor shortage challenges and escape the prevalent “survival mode” mentality. True, The Great Reassessment has disproportionately affected retailers, but it spans across all sectors and impacts every industry in a variety of ways. Each employer will have to reassess what the next normal means for them.
Lauren Winans is the Chief Executive Officer and Principal HR Consultant for Next Level Benefits.