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Perks for Seasonal Workers: Higher Wages, Free Lunches, Even a 401(k)

Shoppers carry bags along Oxford street during the final weekend of shopping before Christmas in London

REUTERS/Luke MacGregor

Free lunches, rides to and from work on the company bus, on-site childcare — no, it's not hot startups in Silicon Valley competing for tech talent; it's retailers scrambling to fill seasonal jobs in stores and fulfillment centers in a tightening labor market.

Perhaps most importantly for retail's army of hourly wage earners, workers have grown scarce enough that employers are finally raising pay.

"I think the biggest impact we're seeing right now is the increase in wages," said Amy Glaser, senior vice president at Adecco Staffing. With wages for seasonal workers climbing 20 to 25 percent since last year, "It's a huge opportunity for folks who may not have been interested in seasonal work in the past," she said.

"We've seen very robust growth in new position, year-over-year," said Peter Harrison, CEO of Snagajob.com. There's a 26 percent growth in numbers of active open positions," he said. "In previous years, it might have been in the teens."

The Average Hourly Wage Has Risen to $14 an Hour

New data from Snagajob found that 90 percent of companies surveyed said they plan to hire seasonal workers, up from 82 percent last year, and the average hourly wage retailers expect to pay is just under $14, up more than $4 an hour from last year.

In addition to raising wages, more competition is nudging retailers to be more creative and add perks, Harrison said. "Fringe benefits seem to be the theme there," he said. "The benefit could be more hours, more flexible hours, it could be food, it could be mentoring, training or a better likelihood of being hired back," he said.

"There are some people who give you full benefits starting day one [and] I've seen more of employers offering ones like 401(k)s," said Frank Layo, a retail strategist at Kurt Salmon. "That's something you wouldn't have seen a few years ago."

The continued growth of online and mobile shopping looks to drive most of the increase in retail sales this holiday season even though, as a category, it is still much smaller than brick-and-mortar. Kantar Retail predicts a 3.8 percent growth in retail sales for the fourth quarter, largely due to a nearly 16 percent increase in ecommerce. Brick-and-mortar sales are projected to increase a bit under 2 percent, said Kantar Retail chief insights officer Leon Nicholas.

"We're actually expecting a slowdown in the rate of growth for brick-and-mortar channels in this holiday period, versus online, which is expected to accelerate," he said.

At Out-of-the-Way Warehouses, They Will Ship You in and Buy You Lunch

This shift in America's shopping habits also changes retailers' hiring patterns. The increase in ecommerce has prompted retailers to increase staffing in call centers and warehouses by 10 to 20 percent, Glaser said. These sprawling facilities often are located in out-of-the-way places, prompting the use of incentives like free lunch and transportation.

"Retailers are struggling filling these fulfillment positions, and adding additional benefits," Layo said. "There's just not as many people out there to do the work," he said. The added challenge for retailers is that ecommerce is more labor-intensive: While one employee could easily stack and then ring up a dozen sweaters in a store, it takes more time and more people to package up and ship each of those sweaters to a different address.

"We saw a strong trend last year towards warehouse and logistics and we fully expect that will happen again," Harrison said. UPS said it plans to hire 95,000 seasonal workers for the holiday season, primarily drivers and package handlers.

With Increased Competition, Early Hiring is the New Norm

Retailers are under the gun to staff up earlier because competition for shoppers' dollars and the promotions that go with it seem to start earlier every year, and this "Christmas creep" has conditioned consumers to start their holiday spending earlier. According to a survey by Market Track, more than one in four shoppers plan to be mostly wrapped up with their holiday purchases by Halloween, an increase of eight percentage points from last year.

"Retailers are starting earlier than they have in past seasons," Glaser said. "Often in the past they might have waited until September or October," she said, but this year she said recruitment efforts began as early as August.

"Every year we've seen employers start earlier," Harrison said. "They anticipate that it's going to be a scramble and they want to get ahead of it."

Outplacement consulting firm Challenger, Gray & Christmas predicted retailers will add more than 700,000 seasonal positions in total, a bit down from nearly 739,000 last year. Many retailers say they're giving their year-round staffers first crack at additional shifts, which would cut down on the number of new people they would have to hire. Snagajob found that the average employer expects seasonal hires to work 27 hours a week, up from 23 hours a week last year.

Among the initial hiring announcements from big retailers, Target plans to add 70,000 seasonal hires, and will add 7,500 people at its distribution centers where online orders are processed.

JCPenney said it will hire 40,000 for the holidays. "We're also seeking to convert many of our seasonal hires to permanent positions after the holidays," a spokeswoman said via email. "Additionally, our store GM's are empowered to determine the appropriate pay range if a seasonal candidate happens to offer valuable retail skills and experience."

Toys R Us declined to give a national figure but said it was adding more than 4,500 seasonal jobs in New York City, 2,700 in Los Angeles and 1,200 in Chicago.

Will it Be a Strong Shopping Season?

Retailers are making these preparations with the prevailing sentiment of what Joe Feldman, senior managing director at the Telsey Advisory Group, called "cautious optimism," but he added that a strong holiday season is far from a sure thing, especially for brands that have struggled to navigate the shift from brick-and-mortar to online sales.

"It seems like the pressures have mounted as of late," he said. "I think there's been some concern that sales have slowed down." Worry that the economy is slowing down and uncertainty surrounding the presidential election could keep shoppers on the sidelines, and millennial spending preferences mean that retailers today also face increased competition from travel, entertainment and other experience-based spending around the holidays.

"Consumers are being picky about where they're going to spend [but] they're able to spend," he said. "The macro data that continue to come in continues to show that things aren't that bad."