Hiring spree slows: Retailers cut back on hiring, downturn intensifies | News, Sports, Jobs

The Associated Press A customer checks price tags while shopping at a retail store in Schaumburg, Illinois on June 30. .

NEW YORK — After going on a recruiting spree for a year and a half to meet growing demand from shoppers, U.S. retailers are beginning to temper recruitment.

The shift in mentality comes as businesses grapple with declining consumer spending, the prospect of an economic slowdown and rising labor costs. Some analysts suggest traders have also learned to do more with fewer workers.

The nation’s largest employer, Walmart, said it recently overhired due to a COVID-related staffing shortage and then reduced its workforce through attrition. In April, Amazon said it too had decided it had a surplus of workers in its warehouses. And FedEx, whose customers include major retailers, said late last month it was hiring fewer people.

Additionally, new data shows that retailers have cut signing bonuses in recent months and are no longer relaxing job requirements — a sign that they no longer feel pressured to expand their candidate pool, according to the report. job analytics company Lightcast. And Snagajob, an online marketplace for hourly work, reports that retail job postings have slowed in the past two months, although they remain up from a year ago.

Retailers “will take a conservative view of what is possible and what is necessary, because the price they will pay for being wrong will be small if they lack goods and do not have enough personnel, and massive if they end up with a glut of inventory and they employ too many people,” said Mark Cohen, director of retail studies at Columbia University and former CEO of Sears Canada.

The easing in retail hiring is occurring in a labor market that has seen volatile swings throughout the recovery from the 2020 pandemic recession. In the beginning, companies like Amazon, Target and Walmart that providers of daily necessities and home goods have stepped up hiring to meet overwhelming demand from online shoppers. At the same time, stores like Macy’s and Nordstrom, whose clothing lines were considered non-essential by many at the time, temporarily laid off workers during nationwide shutdowns.

The decline in retail hiring comes against the backdrop of a still buoyant national labor market. On Friday, the government is expected to announce that US employers added 275,000 jobs in June, according to economists polled by data provider FactSet. That would represent a solid gain, even if it would be the smallest monthly total in over a year. That would suggest the pace of hiring could be slowing – something the Federal Reserve has been hoping for as it seeks to slow the economy and rein in high inflation.

The unemployment rate for June is expected to have remained at 3.6%, just above the half-century low that preceded the pandemic and a sign that demand for workers, across the economy, is always strong.

The labor market became extremely tight from the spring of 2021, after the country emerged from lockdowns and people, many of them newly vaccinated, were eager to go shopping and dine out again. At the same time, many workers were re-evaluating their jobs and wondering if the long hours were worth the pay, and some decided not to return to their employers.

In May, the retail sector shed about 61,000 jobs, although overall employment in the sector is still 159,000 above its pre-pandemic level in February 2020. Jack Kleinhenz, Chief Economist at the National Retail Federation, the nation’s largest retail group, said it believed the decline was more of an aberration. In a most recent report on job departures, it noted that there were 1.1 million job openings in retail even as around 730,000 people in retail received unemployment benefits. This meant that retail job vacancies far exceeded the number of people applying for unemployment benefits.

But changing consumer behavior is already weighing on retailers and other types of businesses. Netflix and Peloton have announced layoffs, for example, while tech giants like Facebook parent company Meta Platforms Inc. and Uber Technologies say they have moderated their hiring plans. Such a pullback, if replicated elsewhere, could herald a broader reduction in hiring across the economy and ultimately help slow the economy and dampen high inflation.

The latest round of retail income reports show how soaring inflation for gasoline and other basic necessities is forcing shoppers, especially low-income households, to avoid discretionary purchases and to focus more on commodities. The Fed’s recent interest rate hikes, aimed at curbing inflation, are expected to further depress spending by making it more expensive for consumers and businesses to take out loans. Shoppers have increasingly shifted away from purchases they spent heavily on during the pandemic for their homes, such as appliances and furniture, toward services like restaurants, as dining out becomes normal again.

With online shopping slowing, some affected retailers are pulling back. Amazon, which has doubled the size of its operations and nearly doubled its workforce in the past two years, is letting some of its warehouse leases expire and postponing construction of others, according to CEO Andy Jassy. The e-commerce giant also reportedly intends to sublet its excess space. Experts say Amazon and others may decide to find uses for their excess work as the holiday shopping season approaches.

In the meantime, many small businesses are lagging behind in hiring compared to their bigger rivals. Squeezed by supply chain disruptions and labor shortages, many smaller retailers have been unable to stock enough goods or hire enough people.

“They’re still getting their way back, as some of these oversized companies are now finding they’re hungover,” said Cohen, the retail analyst.

Sadie Cherney, owner of Clothes Mentor, which operates three women’s resale boutiques in South Carolina, noted that the staffing shortages she’s faced over the past 18 months have created “Burnout” among its long-time employees. Cherney increased his salary and provided more flexible hours than his competitors. Yet only about 15% to 30% of its scheduled job applicants show up for their interviews. This is why store opening hours are not yet fully restored to their pre-pandemic levels.

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