With unemployment at its lowest rate since December of 1969, retailers and other businesses that ramp up staffing for the holiday season are going to have a tough time finding workers. For people looking for a seasonal job, this is good news: They can expect to find higher pay, more flexibility in scheduling, and even perks like paid time off, analysts say.
According to an annual survey from online hourly-work platform Snag, 84 percent of businesses say they’re going to need extra workers this holiday season. In the face of a tight labor market, that demand is driving pay higher. Snag also found that the average hourly wages that companies expect to pay seasonal workers jumped by 32 percent in only a year, with average hourly pay rising from $11.70 in 2017 to $15.40 this year. For the retail sector, average seasonal pay jumped by a whopping 54 percent.
It’s easy to see why: The September jobs report released Friday by the Labor Department found that the unemployment rate had fallen to 3.7 percent, despite the addition of only 134,000 jobs during the month of September. Some economists suggested that low number was a fluke, pointing out that upward revisions to July and August employment figures led to the addition of a combined 87,000 jobs for those months.
“Overall, it was a continuation of the strong jobs reports we’ve seen most of this year,” said Kate Warne, an investment strategist at Edward Jones.
This means businesses that want to hire holiday workers will have to be more generous with pay and benefits, as well as start their searches earlier. “Retailers are expecting this to be a really big quarter,” said Andrew Challenger, vice president at Challenger, Gray & Christmas. “Their plans for holiday hiring indicate that they need a lot of help. We’ve seen a couple of unconventional things,” he said.
Some brick-and-mortar retailers started their searches to fill holiday slots as early as July, he said, and Amazon’s surprise announcement this week that it will pay hourly workers a minimum of $15 an hour starting in November will likely force other retailers to raise pay in order to compete, said Challenger.
Even before Amazon raised the bar, businesses had resigned themselves to having to pay more for workers this holiday season, said Fabio Rosati, CEO of Snag. “Holiday hiring is going to be really difficult this year. It will probably be the hardest hiring season for retailers and restaurants and hospitality companies,” Rosati said. “They are not only facing a tight labor market but also increasing competition from two huge new categories,” he added; namely, warehousing and the gig economy.
Despite the tight labor supply to meet seasonal demand, retail remains a perennial weak spot in the overall job market; in September, the sector shed 20,000 jobs, even as transportation and warehousing added 24,000 jobs — a sign, Challenger said, of how radically the industry is shifting to focus on online shopping.
“A lot of cashiers and salespeople and store managers have lost their jobs, and those jobs are not coming back,” he said. “The new jobs the retailers are adding are in distribution centers and warehouses. They’re backroom jobs and they require a different set of skills.”
“A lot of cashiers and salespeople and store managers have lost their jobs, and those jobs are not coming back.”
Although the labor force participation rate remains stuck just below 63 percent, businesses are running out of discouraged or underemployed workers to tap, said Sameer Samana, a global equity and technical strategist at the Wells Fargo Investment Institute. “If there’s not a lot of people left on the sidelines that want to work, then you have to fight for existing workers in the labor force already,” he said. “You get caught up in a little bit of a war for talent heading into the holidays.”
There are growing indicators that companies are going to have to pay more if they want to attract workers with those skills, experts say. “We might be getting to the point in the economy where there is a real labor shortage… They haven’t had to face that yet in this expansion,” Challenger said. “It seems like we might be getting to that inflection point.”
While wage growth in September remained at an annualized 2.8 percent, according to the Labor Department, economists think a trend towards higher pay is finally picking up steam, and this holiday season could give this upward movement significant momentum. “I don’t think there’s any disconnect now. The employment cost index shows 3 percent wage growth for private sector workers, and that’s exactly where you’d expect it to be right now,” said Mark Zandi, chief economist at Moody’s Analytics. “I would expect wage pressure to continue to accelerate."
In addition to paying more, companies are searching for non-cash incentives to lure workers. “They're starting their hiring earlier and they’re concerned about the wages they’re going to have to pay,” Warne said. “They’re focusing on time off and benefits as much as they are about wages,” she said, referencing anecdotes of businesses letting workers accrue paid hours off for the duration of their employment.
Andrew Chamberlain, chief economist at Glassdoor.com, said some companies are even looking into offering retirement benefits, a previously unheard-of perk for temporary workers. “I have heard anecdotes about companies offering some kind of retirement plan contributions, which would be very unusual,” he said.
It’s likely that a buoyant stock market is one reason why this seems like a compelling benefit. “People look at the tech industry and they see the power of granting stock options and they see the stock market rising today,” Chamberlain said. “We do know that’s one of the perks that drives satisfaction.”
Chamberlain added, though, that higher wages are still likely to be a stronger driver. “Frankly, money talks when it comes to temporary work,” he said. “Most people who take holiday jobs are not in the labor force. They’re really just looking for cash. Amazon is on the right track offering higher base pay.”