Many Americans started their working lives cultivating teenage ennui in a more-or-less dreary retail job, stocking shelves or running a cash register. Those who have moved up the income ladder may see the sluggish economy as a sort of malign time machine that threatens to send them back where they started. But Friday’s depressing jobs report suggests that those who found themselves greeting customers again would be the lucky ones. Retail trade suffered easily the sharpest decline in employment of any sector of the economy, a loss of 24,000 jobs.
This certainly cuts against the notion that quantitative easing, and the accompanying stock and housing price inflation, are creating a wealth effect that is stimulating consumption. If the stores were full, surely they would not be letting workers go. That said, more than 15m Americans work in retail. The loss of two-tenths of a per cent of those jobs should not induce hysteria, even if it is more than a statistical blip. A cold spring and the astonishingly mistimed increase in the payroll tax could explain whole change, and more.
The long-term trend, though, suggests that retail is a diminishing source of employment. Most of the biggest retailers, starting with Walmart, have been growing sales much faster than their payrolls (resurgent Home Depot is an interesting exception). To the extent that the sales increases at the big chains have been driven in by price inflation, this is no surprise. And from one perspective, the companies are doing what companies are supposed to do: squeeze more productivity out of their human resources.
This trend is quite different at Amazon, which has expanded its employee base, on average, 39 per cent a year over five years, six points faster than sales. In time, though, the shift to online shopping will undoubtedly reduce the number of retail jobs: Amazon’s sales per employee are more than twice those of bricks-and-mortar rival Best Buy.
The net result is that the same number of people working in retail now as in mid-1999, and retail as a proportion of total employment has ticked steadily down since. Where will the economic time machine take us, then? A hospital or old folks’ home, most likely: healthcare and social assistance passed retail as an employer in 2008, and the sector has been adding jobs at a metronomically steady pace for decades
