The retail season is starting to gather steam, with the National Retail Federation expecting a record-setting spend for the new academic year. That's a 12% increase over last year – much more than just inflation – and we're not even talking about the holiday season. But does the retail industry have the workers it needs to handle the volume?
The long-term trend in retail has been toward e-commerce, which is less labor-intensive. Businesses don't need as many workers when they're just shipping products that were ordered online rather than meeting consumers face-to-face. The trend was supercharged during the early years of the Covid-19 pandemic, but it has basically returned to its pre-pandemic trend:
The growth of e-commerce has been a drag on employment in retail, with the ratio of jobs to consumer spending (adjusted for inflation) steadily falling over the past decade. It's been a steady downward slide, again accelerated by the pandemic, but right now employment is still about 3% lower than the level of spending would predict:
The fact that the ratio has been steady since early 2022 suggests that businesses may be making do with fewer workers than they need until they can move further into e-commerce. After all, it looks like the dotted and solid lines above might meet within another year or so. But the dotted line can't keep going down all the way to zero; at some point it will flatten out, so the gap with actual employment could persist.
As you might expect, the biggest need for workers in retail typically occurs in December, at the height of the holiday shopping season. Between 2010 and 2019, wage and salary employment in retail in December was typically 2.2% above the annual average in metro areas across the country, adjusting for long-term trends. November was 1.7% higher and – perhaps surprisingly – January was 1.8% higher, to take care of all the sales, returns, exchanges, and inventory updates. Of course, retailers often end up expanding their staffs by much more than 2.2% on a temporary basis.
A growing number of retailers have been relying on platforms like ours, and not just during the holiday season. They've been using Pros for roles throughout the value chain, from the laborers in their warehouses all the way to the brand ambassadors who make their pitch to customers. For shifts booked at least a couple of days in advance, most roles have been filling up at rates of 90% or higher:
Underpinning these high fill rates are fairly steady rates of hourly pay over the past year, especially for general labor and entry-level warehouse shifts:
(Note that Instawork started offering brand ambassador shifts earlier this year.)
Using some workers on flexible schedules throughout the year offers a range of advantages. Businesses can build up rosters of trusted workers who know the roles and workplaces, and these workers can support the newbies who come in during peak times. Bringing workers in on a flexible basis also offers an opportunity to "try before you buy" with an evolving group of potential new hires.
Right now is a great time to start building up a roster in retail. A big back-to-school season is a good trial run for the holiday season to come, and there are still a few months left to try out the workers who will be needed at that critical time.
These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 8/3/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:
To receive future briefings and data insights from our Economic Research team, please subscribe below. Follow Daniel Altman on Twitter at @AltmanEcon or on LinkedIn.
