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Are ‘Underemployed’ College Grads an Opportunity for Retail?
A new study from the Burning Glass Institute and the Strada Institute for the Future found that 52% of college graduates end up working in jobs that “do not require a degree or make meaningful use of college-level skills” within a year of graduation, including working retail selling floors.
Other “underemployed” jobs college graduates find themselves working in include food service, construction, hospitality, and office administration, according to the report.
The study, based on analysis of 2022 U.S. Census Bureau data along with job postings and online resumes of more than 60 million U.S. workers, underscored how critical getting the first job out of college is to long-term earnings and career success.
Of the graduates in non-college-level jobs a year after leaving college, 45% remained underemployed a decade later. Compared to someone with no education beyond high school, a recent graduate employed in a college-level job typically earns about 88% more, while an underemployed graduate earns only about 25% more.
What a student studies particularly determines their odds of getting on a college-level career track. Graduates with bachelor’s degrees in biology, psychology, communications, arts, or non-math-intensive business fields (e.g. management, marketing, or human resources) faced higher underemployment rates than those with health, engineering, or education degrees. Internships were also found to be critical in landing a college-ready job.
Retailers may gain a second chance to convince college graduates to pursue a retail career, with some working their selling floors as a stopgap measure in starting their careers.
A University of Florida study from 2016 found that while negative stereotypes associated with retailing, including long hours and low pay, have traditionally challenged college recruiting, “a pool of talented graduates now want to pursue careers in retailing, in part inspired by the rapidly changing landscape of retailing, with emphasis shifting toward employee responsibility in areas such as financial management, leadership, and technological skills.”
Walmart, Nordstrom, H-E-B, and L.L.Bean are among retailers with training programs aimed at college graduates for store and department managers.
“The store is your classroom,” L.L.Bean’s recruitment pitch states. “‘Learn by doing’ in this experiential training program.”
Still, settling for a first job in a low-paying field or one that’s out-of-line with their interests risks leading a worker to get stuck in an undesirable role or industry that’s hard to escape.
“I would stress to anyone out there, hold out as long as you can” for the right first job, Alexander Wolfe, a 2018 Northern Kentucky University graduate who earned a degree in integrative studies and currently works in security, told the Wall Street Journal. “You don’t want to pigeonhole yourself into something you don’t want to do.”
Discussion Questions
Can retailers capitalize more on the seemingly greater amount of college grads open to retail work?
On the other hand, what are the risks of hiring “settling” employees?
Poll
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Neil Saunders
Managing Director, GlobalData
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Retailers should absolutely be looking at graduates. Sensible retailers will have training schemes for both graduates and non-graduates to help those that are suitable and want to progress prepare for management roles, whether those be in stores or in corporate. The one thing I think that is good about retail is how meritocratic it can be. People like the CEO of Walmart and the CEO of Marks & Spencer worked their way up through various roles. Retail needs to ensure it promotes this to show it is a good career choice.
I’m confused as to what is being asked about here as “working in retail” can have two entirely different connotations (management training programs vs. being on the floor) So are the former having trouble recruiting people?? If that’s the case, then it’s not hard to see why: the siren song of tech – or finance or … – vs unglamorous retail isn’t an even match (obviously these are a part of retail, but I doubt many college students think of it that way); and relentless consolidation may deter many from what they see as an unreliable future (when I was in school, there were probably a dozen or more department stores at the Career Center…guess what happened to them?). OTOH, if the question is can retailers do more to capitalize on people being underemployed, then the answer is clearly NO: they’ve already capitalized quite well on it, thank you! It’s (at worst) a small exaggeration to say that the business model of most retailers is precisely why these people are “underemployed” in the first place.
And our other discussion today looks at continued grocery consolidation – what ambitious young person is going to bet on industries where local and regional operations keep getting bought out and shut down by national/overseas operators? I do see more Gen Z actually starting their own companies & applaud their initiative – they’ll learn faster that way than being stuck in a top-down conglomerate.
I started on the sales floor at a department store and it was the best thing I ever did. “The store is the classroom” and “Learn by doing” was exactly what happened. I learned more working with talented people than I did in college or the management training program I went through at a second department store job. So, of course retail should capitalize on recent graduates, but then again, hasn’t it always?
This article pitches retail as the “safety option.” When you can’t get the career you were hoping for, there’s always retail. Seems not much has changed in the last several decades.
I was going to write something similar to my colleague Craig above. He really outlines the problem: The industry is not structured to give college graduates a future.
Then I thought about a once young man who I know very well. After college, while looking for something permanent, he got a job on the floor of a small national chain in his hometown. It was never his intention to pursue a retail career. However, he was promoted to assistant store manager before he found something permanent. Then, he was quickly promoted to assistant store manager of a city store. Before long, he became manager of their most challenging store and then manager of their flagship store. Then, men’s wear planner and, soon, men’s wear buyers.
Macy’s came along and offered him a buyer position in juniors and surf (whatever that is). He spent five years there, and Walmart recruited him for their NYC office. Then, he was off to Bentonville as Vice President of Planning and Merchandising for women’s apparel. Five years in Bentonville was enough, and he wanted to try the vendor side back in NYC, where he sits today.
So, I guess there is an opportunity for college grads in retail, but the pyramid is extraordinarily steep.
Regardless of education (degree or no degree), many employees are looking for more than just a paycheck. They want fulfillment, and part of that comes from an opportunity to grow, either by learning (new skills or knowledge) or by moving up. Create an opportunity for growth and you will keep more employees. At the minimum, create an experience that goes beyond just receiving a paycheck. This will help attract and keep good employees.
I’m with Craig and Gene on this one. A big box retailer has maybe 200 employees on staff (not all at once!) and one store manager. What are the odds? Not great. Retailers have started adding more in-store mid-management, like shift leads and key holders, but none of these things require a college degree either. If you get hired for the floor, you’re rarely viewed for your potential, except for the potential that you’re going to be reliable in coming in for the hours they’ve scheduled you. Long before this decade, retailers have had the opportunity to have first bite at choice talent and have not managed it – except for the rare story of the individual that Craig shared. You talk to retail execs and it may not seem that rare because they all either are or know that kind of person, but as a percentage of the total retail labor force at a company, they are the exception far more than the rule. The perpetuation of the myth of “every” retail worker having a shot at gaining management and then executive ranks might actually be more damaging than helpful. And I just don’t see that changing any time soon.
The problem for retail here is the false promise of so many college degrees. Can they leverage this? Sure–however they need to sell it, and I do not see them doing that. What I see when I walk the mall is disinterest-in the customers, in the stores, in selling, in engaging, blah blah blah…on about a 2 to one scale-for every one engaged associate you get two who are more interested in their phones.
Can this be overcome? Absolutely, and I believe the WM store manager earnings opportunities that hit the news is a step taken correctly.
It will be interesting to see whether this opportunity is realized.
Alexander Wolfe is not wrong: Pigeonholes are real! Unfortunately, retail isn’t sexy and when you couple that with the hiring myopia alluded to by Alexander, it’s understandable why recent graduates would avoid certain industries.
As hiring managers, we have ourselves to blame. We’re more interested in not making a mistake than on betting on an outsider even if that outsider is overflowing with transferable skills. As a young professional back in the early days of tech, I faced this myopia and it was infuriating. As a result, I committed to ensuring that I remained open minded in my hiring. Yes, I have bet and lost a few times on the “diamonds in the rough,” but overall, I have benefited far more. I have benefited not only from the talent itself but from the different perspective, insight and learning that is gained from the “outsiders,” and the loyalty that is automatically built by taking a chance on the right someone.
Sadly, in hiring, marrying your kin is still okay and most times, it might even be necessary but we should all take chance once in a while and diversify the gene pool; it makes an entire “industry’s population” healthier and smarter in the long run.
Retailers can benefit from the increasing number of college grads open to retail work, especially those in underemployed positions. By offering targeted training programs, emphasizing career growth, internship opportunities, industry partnership, flexible work arrangements, highlighting corporate responsibility initiatives and highlighting the evolving nature of retail roles, retailers like Walmart & Nordstrom and L.L Bean have created a chance to attract and retain talented graduates seeking opportunities in the industry.
These strategies enhance appeal and engagement, creating a mutually beneficial relationship with the emerging workforce. There’s a risk of hiring employees who settle for low-paying jobs, leading to dissatisfaction and potential difficulties in retaining talented individuals. It’s crucial for retailers to balance attracting grads with ensuring roles align with their career aspirations.
The whole tone of this conversation is a little unsettling. It’s as though retail would only ever be a second or third choice, after more attractive alternatives had been exhausted. How about if we back up a step and talk about college students rather than college grads? How about if we educate and prepare college students for a retail career as a first choice? There are indeed college programs that now do exactly that, whereas years ago that was not the case. I say that as a finance graduate who thought I would end up in an accounting firm or a stock brokerage. Retail was never on my radar until I grabbed a practice interview with a department store. Two interviews later I was hooked. Yes, I was second guessing my choice as I organized the stock room one day in my new suit, but there are always potholes along the way. There is nothing sexy or romantic about the early phases of a retail career. But overall, it can be wonderfully engaging and fulfilling. Retail belongs on the list of attractive first choices for careers for graduating students.
Retail has long suffered from a dirth of talented employees. The problem lies less with the employee pool (college educated or not) & more with the attractiveness of a retail position, compensation, development , growth opportunities, etc. offered by retailers. Take a look at Enterprise Car Rental. They have done a terrific job of recruiting college grads with a variety of degrees to make a real difference in their customer facing business. The program highlights the concept of a professional career. Enterprise has developed the template for engaging college grads in pseudo retail environments.
College grads have a variety of career paths they could take. Going into tech is desired because even with long hours, job tier levels are well-defined, team work groups are invented to make a difference, and stock awards are evident.
Retail must continue to up the game, show grads several different paths for growth, whether for smaller independent stores or a chain. As long as these young hires can see clear growth options, and that there is a desire to reward them along the way, retail can for sure attract more college grads.