NRF: Retail Means Jobs (Good Jobs?)

Discussion
Jan 19, 2012

A major theme of this week’s National Retail Federation 101st Annual Convention was that "Retail Means Jobs." And NRF supported that contention by citing lots of statistics related to retail in the U.S.:

  • Retail supports one in four American jobs, or a total of 42 million.
  • Retail has a total GDP impact of $2.48 trillion.
  • The industry operates 3.6 million establishments.
  • Retail is the number one private sector employer.
  • Retail provides 50,000+ jobs per congressional district (hint, hint).

These are impressive and are a big part of NRF’s effort to show just how important the retail industry is as they step up lobbying on issues such as: interchange fee reduction; sales tax fairness; free trade policy; modernizing U.S. infrastructure; health care reform; and reforming the U.S. visa process for workers. NRF seems to be on a serious campaign to promote solutions for issues that are of major importance to the retailing industry, and one has to give them credit for this campaign, their aggressiveness and, as a side note, the terrific and enthusiastic turn out for their just completed ‘BIG Show.’

Regarding jobs, though, I wonder if it makes a difference how well-paying they are. A recent study of New York City retail workers cited in The New York Times found that they earn approximately $9.50 per hour and that many received no health insurance benefits. Workers complain that irregular work schedules make it difficult to make arrangements in advance for childcare and to enroll in educational classes. (Although this study was done by a City University professor, it was financed by a union and an organization funded by unions.)

Reporting on the same study, The Huffington Post said that female workers made nearly a dollar less per hour than their male counterparts and that few workers of either sex were entitled to paid sick days. And retailers were set to make approximately 500,000 temporary hires this past holiday season, which obviously has an inherent problem in that they are temporary.

As a frame of reference, a retail worker making $9.50 per hour for 52 weeks per year, at 35 hours per week would earn $17,290. The federal poverty guidelines are currently $10,890 for a single person; $14,710 for a family of 2; and $18,530 for a family of 3.

In contrast to the study numbers, indeed.com says that the average starting salary for a retail sales associate is $28,000, while the average chief executive’s salary (not specific to retail) is $206,000.

Discussion Questions: Are the realities of retail compensation affecting the industry’s ability to attract the type of talent that would excel on the front lines? As the private sector’s largest employer, does the retail industry have an obligation to try to improve pay and benefits for associates?

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14 Comments on "NRF: Retail Means Jobs (Good Jobs?)"


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David Livingston
Guest
10 years 4 months ago

Pay is set by supply and demand. Most people know you can make about $40,000 in cash and benefits (food stamps, medicaid, Earned Income Credit, WIC, welfare, etc.) from the government if you choose to not work at all. So why go work in retail for $20,000? Sure you can keep some of those government handouts, but unless you are making over $40,000 a year in a job, you are basically a volunteer. I think retailers will continue to focus on attracting people who don’t rely on retail as their primary source of survival, such as students, elderly people, and moms who want something to do while their kids are in school.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 4 months ago

Salaries that are not far above the poverty line are not going to attract top-level people to retail sales positions. Since it is not realistic to pay the average retail sales associate much more than they currently make, retailers should investigate customer-facing technologies that are more cost-effective in the long run to help improve what is often a poor shopping experience.

Steve Montgomery
Guest
10 years 4 months ago

In order to pay more I need to either charge more, have fewer employees to do the same work, etc. We know charging more isn’t going to work as customers will not pay more. Having fewer employees isn’t likely to work as there is a defined amount of work. True there may be some opportunities with greater automation but there is not guarantee that if retailers automate the skill level won’t go down and compensation with it. B&M retailers are in game changing times and there are no easy answers.

Max Goldberg
Guest
10 years 4 months ago

Yes, retail makes it hard to attract and keep good talent. The trick is how to balance consumer desire for low cost with the need of sales associates to make a living. This makes retail a stepping stone for many careers, but not a career in itself, especially for college graduates.

We can say all we want about the need to raise pay and benefits, but if consumers are still coming into a store, and if revenues remain stable or increase, there is little pressure on store management to increase compensation.

Doug Stephens
Guest
Doug Stephens
10 years 4 months ago

Regardless of what we would like to think, the average retailer’s primary occupation is going to be trying to stay in business. It will not be to make the world a better place for retail employees.

The good news, in my opinion, is that there is a sea level change occurring in the market, whereby being “average” will no longer cut it. Consequently, the need for mind-numbingly boring slave labor, will fall off steadily. Self service or pure-play online will be the only viable model for retailers who are so thoroughly commoditized that there’s no room for living wages. At the other end of the spectrum, brands who have figured out how to deliver something unique, compelling and remarkable, will have the margin room to put quality staff behind their products and pay them more.

David Biernbaum
Guest
10 years 4 months ago

It would be “ideal” if the retail industry was able to improve pay and benefits for employees, however, it’s probably not realistic due to conflicting goals and objectives with regards to bottom-line business, pricing, and profitability. That said, if a given retailer determines that it can attract the cream of the crop by improving compensation and benefits, then they should pursue that in the right way, with the clear objective of using service and hospitality to win over their competition.

Paula Rosenblum
Guest
10 years 4 months ago

This is a very complicated issue, that can’t be fully addressed in a series of sound bites. Because it’s so complicated, I don’t think I would have embarked on the “Retail Means Jobs” initiative if I were NRF (although I certainly wasn’t asked). It opens itself up for exactly this kind of criticism, and counter-groups have already shown up, which is probably what drove the articles.

Most retailers’ store profit models have been historically built on a large transient staff of part-time store employees, largely ineligible for fringe benefits. The real question is, what’s the right model for 2012 and beyond? Can a retailer improve pay and benefits and still remain profitable? And what happens if as an industry, we don’t improve pay and benefits? You would think US retailers would be more supportive a single payer system, and remove the issue of health care entirely, but they aren’t/didn’t.

Like I said, it’s very complicated.

Gene Detroyer
Guest
10 years 4 months ago

“Obligation” is a strange choice of words. A retailer, just like any other business, has an obligation to run their business for the bottom line and the future. Businesses are not charities. While a retailer may be making a mistake by underpaying associates (e.g. Circuit City), they certainly should make that decision if they think it will help the business.

With regard to obligations…societies have obligations and governments have obligations. If it is better for the welfare of a society or a country to have higher wage levels at the lowest economic rung, they should require it. But, the company should not.

Warren Thayer
Guest
10 years 4 months ago

Good points from everyone. This just underscores the need for brick and mortar to make more and better use of online to remain competitive.

Jerome Schindler
Guest
10 years 4 months ago

Years ago I was talking with someone who worked at a factory. He said he did not know how much he made a year because due to frequent labor strikes, he seldom worked a year. The ugly truth about retail is that few employees work a “year” because they are mostly part-time, a practice designed to avoid paying for benefits like health insurance. A retailer not following that practice would be at a competitive disadvantage to its competitors who do. Sad state of affairs. That is the best argument for federal national health insurance that would require employers to pay something into a health insurance pool for their part-timers.

Mark Burr
Guest
10 years 4 months ago

The problem isn’t necessarily retail wages. The problem is that it is the private sector’s largest employer and it isn’t structured to be in that position. As a result, does it have an obligation? No. Could retail as a sector do better? Absolutely. Retail could do a lot better.

As a society, if we want retail in this position and care about its standards of wages and benefits, we have a decision to make. We as a society would decide to purchase accordingly. We do not. This is part of the discussion yesterday related to Whole Foods.

Consumers simply don’t make decisions on this basis. If they did, the industry would be completely different. It is not. Here we are.

Is this the result or intended or unintended consequences? Consuming decisions do have consequences. Here we are. Like it?

Nikki Baird
Guest
Nikki Baird
10 years 4 months ago
I think a lot of the assumptions that retailers make about store labor no longer apply — or at a minimum are in flux. All of the assumptions that retailers make about labor today are based on an old way of working smushed up against a new way of serving customers. While it is true that technology can help address a lot of these issues, I still don’t hear a lot of people address how it changes the store associate. So far, all of the talk has been about working around the assumption that the store associate is going to continue to be paid minimum wage or near-minimum wage, with part time hours and no benefits. But thrusting an iPhone into their hands isn’t going to magically turn that employee into someone who can actually help customers. An exhausted, 3-jobs worker, juggling child care and/or parent care, working while sick because she has no sick days or health care and surly because she’s seen her coworker get “descheduled” because the retailer doesn’t want the responsibility… Read more »
Ted Hurlbut
Guest
Ted Hurlbut
10 years 4 months ago

Retail pay is what it is because retailers have convinced themselves that there is no return on investment at higher skill levels and wage rates. Many of us might disagree, but it’s important to remember that most of the major chains are selling highly competitive, highly price-sensitive commodities or near commodities, as much as they might make noises trying to differentiate their merchandise.

Tony Orlando
Guest
10 years 4 months ago
As a small supermarket owner in a poor town, the employees I have get paid pretty well, and if I could, I would give them more. Thanks to the State of Ohio, the minimum automatic wage increase will guarantee less retailers in the future. I shouldn’t be forced to give a 16 year old more money, because our lovely State says so, and there is no way out of this mess. In 7-10 years, our competitiveness will be greatly diminished, as the wage spiraling will eat away most of the profits, as we just can not raise prices in a super competitive environment. What is the answer? I am not sure, but it is going to be interesting to see who survives, and who does not, and I’m willing to bet most small businesses will be the first ones to go. Large big-box stores can spread the increases around very effectively, with the 1+ million dollars per week pouring into their stores. All the niches, and signature dishes may help somewhat, but labor cost is… Read more »
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