JC Penney employs as many people as the entire coal mining industry, about 100,000 (and declining). Maybe we should start paying more attention to the hits retail is taking, as seen in today's jobs report.
While many economists called the March numbers from the Bureau of Labor — with a sharply lower number of jobs created than anticipated, but the lowest unemployment rate since May 2007 — muddled, one trend was clear: traditional brick-and-mortar retail has reached a tipping point.
"We know this is a trouble spot," said Mark Hamrick, Bankrate.com's senior economic analyst. "We know that job cut announcements were the top category in the first quarter. That just means there's more pain to come."
Retail is a huge force in the labor market, accounting for as many as one in four jobs, according to the National Retail Federation. The sector shed 30,000 jobs in March, including a falloff of 35,000 in general merchandise stores alone, following the loss of 26,000 retail jobs in February.
"We're seeing a transition towards ecommerce," said Nicole Smith, chief economist at the Georgetown University Center on Education and the Workforce. "Amazon has really caused a change in the way many people shop." The internet retail giant has said it will hire 100,000 U.S. workers this year, mostly in warehouses and customer service.
"The holidays sent a clear message that at this point, we're moving towards a post-recovery world where online is a really strong preference," said Doug Hermanson, principal economist at Kantar Retail. "Certainly we're seeing in retail headwinds into 2017, especially given brick-and-mortar performance."
Robert Johnson, director of economic analysis at Morningstar said changing demographics are also responsible for the sector's woes, as boomers downsize and millennials remain slow to put down roots. "In general, it's made it a tougher market for anybody that sells goods versus services," he said.
Even with Amazon's corresponding push into warehousing and logistics, "It's not going to make up for the losses in brick-and-mortar," Hamrick said. Even though the embrace of ecommerce is also occurring within traditional chains, in some case it's a bit belated.
"To some degree it is about changing their investment strategy," Hermanson said.
Analysts say ecommerce fails to create an offset because there is a mismatch between the kinds of jobs an ecommerce investment ramp-up creates and the ones that disappear when mall anchors and shopping center stalwarts close their doors.
"We're seeing over the last few years, technology has led the way in pay increases and compensation gains," said Marc Cenedella, founder and CEO of jobs site Ladders Inc. Demand for skills in engineering and proficiency with sales and customer service management technology was growing, he said.
Johnson warned there could be the possibility of a ripple effect. "Retail is one of the biggest sectors, employment-wise, and obviously, if you don't have money coming in, it's not great news for consumer spending," he said.
With consumer spending powering some two-thirds of the nation's economy, a slowdown could set up a negative feedback loop of stores taking in less revenue and cutting more jobs, slowing consumer spending even further.
In addition to dragging down jobs growth, the shedding of so many retail jobs could be artificially improving the appearance of wage growth, which has remained stubbornly below expectations throughout the recovery.
Retail jobs pay about $8 less an hour than the average across the private sector. Some of the five-cent month-to-month increase in wages could be a result of so many lower-wage jobs vanishing, Johnson said.
"That's why these numbers might not be quite as good as they look," he said.