The Premature Death of Retail Jobs

A recent stroll through the local mall was depressing. Although not as bad as the photos you may have seen of “ghost malls”, cavernous and cobwebbed shopping centers, the vacant storefronts were a sober reminder of the state of retail.

Long time mall anchor Sears leased out half its space to fast fashion retailer Primark. The small doorway of an old Bebe and the vast jungle-clad spot of the former Rain Forest Cafe sat dormant.

Anyone reading the news won’t be surprised by this. The death of retailing is a favorite headline. Retail sales numbers illustrate the dramatic shift to online shopping for all kinds of goods.

Shoppers, it seems, are staying at home and clicking on their mice for purchases instead of visiting the mall. As retail bankruptcies pile up faster than last year’s sweater inventory, Amazon keeps racking up profits.

The surprise, however, is that overall retail employment is not on death watch. Some pundits warn that Amazon’s intelligent robots will usurp all retail jobs and that armies of unemployed clerks will find themselves shut out of the job market. The data does not support this dour outlook.

There’s no arguing with the ugly fact that retail bankruptcies since January 2016 are set to eclipse the 2009 recession record of 18 chain closures. Even mall-based retailers like Macy’s, who are not at risk for bankruptcy, are closing significant numbers of stores. Any way you look at it those jobs will disappear.

However, other segments of retail are growing quite nicely. The Bureau of Labor Statistics, the government agency that compiles employment data, categorizes employment between department stores, big-box retailers and smaller stores.

The recent employment data shows a .5% increase in all retail employment over the past 12 months. Most notable is that even after excluding “non-store retail jobs”, a category encompassing electronic retailing, total retail employment grew .3% in the same period.

For most of us, the most obvious place to notice the retail slowdown is in the malls or the big box retailers where you can wander for miles searching for a store clerk. The less recognizable trend is the increase in hires at smaller venues. Boutiques, smaller hardware stores, home furnishing stores and building material and supply stores all saw low single-digit growth in hiring.

Adding Amazon’s jumbo hiring plans and most displaced retail job seekers will find employment. In January Amazon announced plans to hire 30,000 people over the next year and a whopping 100,000 over the next 18 months.

Some worry that frugal Amazon will shortchange hungry workers. Based on the $13.25 hourly wage offered in the Boston area, $2.25 above minimum wage, that seems unlikely. The company promises benefits to workers clocking in at least 20 hours, far less than the 30 hours a week mandated by the government.

I would argue that the shift in employment to well-funded companies like Amazon is a tailwind to the economy. Workers who feel secure and confident in their jobs are better consumers than those worried about layoffs. Instead of a death spiral in retail employment, we may be witnessing the start of a consumer spending melt up.

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