Retailers are holding on to their workforces — cutting back on hours instead of issuing pink slips to get through the lean times.
Brick-and-mortar retailers of all sorts added a seasonally adjusted 45,200 jobs in January, raising employment in the industry to 15.7 million, according to a Labor Department report on Friday. (Seasonally adjusted figures compare January with December).
But retail employees worked a seasonally adjusted average of 29.1 hours per week in January, down from 29.6 in December and 30.2 in January 2023.
“January is a big month for layoffs for a lot of those holiday hires,” said Selcuk Eren, senior economist at The Conference Board. “This year, we didn’t see those layoffs. The layoffs were particularly low, especially in areas like retail trade, a very seasonal industry, as well as construction. Instead, what we see is hours cut.”
It’s a trend that holds across the U.S. economy, which saw payrolls increase by 353,000, a much stronger gain than the 175,000 rise economists projected. Likewise, hours worked per week tallied 34.1, where economists projected hours would hold steady at the December rate of 34.3.
Within retail, fashion specialty stores added 1,300 workers, growing payrolls to 1.1 million, while department stores added a seasonally adjusted 17,500 jobs to employ 945,300.
Of course, there are companies running countertrend. Last month, Macy’s Inc. revealed plans to lay off 2,300 employees, or 3.5 percent of its total workforce. Most of those cuts are coming from the company’s corporate office, but some will also follow the closure of five of its department stores and two furniture galleries.
But generally, employers are taking a once bitten, twice shy approach after many companies laid off workers during the pandemic and then struggled to bring them back.
“It’s really challenging to recruit people,” Eren said. “It’s much easier to essentially wait it out, cut their hours, keep them on the payrolls and when the time comes, when the economy recovers — at some point the interest rates are going to be brought down and then we are going to see higher demand for almost every industry.”
The unexpectedly strong job market reading seems to be at odds with the steady drumbeat of headlines on massive layoffs from big tech or in transportation.
United Parcel Service’s chief executive officer Carol Tome just said on Tuesday that the shipper would “fit our organization to our strategy, and align our resources against what’s wildly important.” The result is about 12,000 layoffs this year.
But Eren said big tech and shipping companies are simply recalibrating, not signaling any broader weakness in the job market.
“What you are seeing is a little bit of a normalization, a coming back down to earth,” he said. “These companies are realizing that the demand is not there as much as they thought it was going to be.”
The economist also said the big layoff announcements can be misleading as some of the cuts are earmarked for abroad and the pink slips are doled out over time, or not at all if the economy recovers.
“Some of these announcements are essentially for shareholders,” Eren said.