The Future of Work

11.23.12

Temporary Holiday Retail Jobs Are Important Economic Force

Every year, retailers and shippers hire hundreds of thousands of temporary workers to handle the holiday-shopping rush.

Retailers are betting on strong holiday sales this year by investing more money in their employees. Store giants like Kohl’s, Target, and JCPenney are hiring up to 10 percent more temporary workers for this holiday season compared to last. Economists say the increases indicate a potential growth in seasonal sales as well as a strengthening economy.

“We have a forecast that seasonal employment will bring in 585,000 to 625,000 jobs this year. This is comparable to the 617,000 that were reported last year. And this is all data that we are looking at between November and December,” said Jack Kleinhenz, chief economist at the National Retail Federation.*

Many large retailers are hiring between 2 to 10 percent more temporary employees this year to help deck store’s halls and sell merchandise. The part-time and full-time hires will work in distribution centers and stores to help ease companies through the busiest five weeks of the year—the pre-Christmas rush.

“The fact that you get seasonal workers is largely because retailers expect consumers to spend,” Kleinhenz said.

Amazon expects to hire 50,000 seasonal employees for its workforce, a number that is more than double the full-time workers it has year-round.

“Temporary associates play a critical role in meeting increased customer demand during the holiday season, and we expect thousands of temporary associates will stay on in full-time positions,” Dave Clark, Amazon’s vice president of global customer fulfillment, said in a statement.

In addition, many of the temporary jobs turn into long-term employment opportunities after the holiday season is over. For example, retail giant Target says it retained about 30 percent of its seasonal team for year-round positions.

Kohl’s said it will hire more than 52,700 associates for its stores, a 10 percent increase from the amount it hired last year. Macy’s is also increasing its workforce by 2.5 percent, hoping to hire around 80,000 employees for the holidays.

However, retailers’ decisions to increase their temporary employee workforce this year may be based on more than just their wish for a good sales season. Economists say the decision is likely based on national trends.

“Clearly any kind of prospective hiring is based on hope,” says Sophia Koropeckyj, managing director at Moody’s Analytics. “But there can be other indicators that would give retailers confidence. For example, consumer confidence is rising, and there tends to be a correlation between rising confidence and actual spending. So sometimes this hopefulness is self-fulfilling.”

As we’ve noted, one of the significant shifts in the economy over the last few months has been the declining confidence of business and the rising confidence and optimism of consumers. The National Retail Federation forecasted that this year’s holiday season will yield 4.1 percent more sales than last year’s—a sales total of $586 billion.

“It’s a solid performance, especially in light of historical averages,” Kleinhenz says. “I think the reason why we are getting a good and solid performance is because consumer confidence is up, home and equity markets are improving and certainly, as people find that their home prices aren’t going down, they feel a lot better and may have more of a propensity to spend.”

Kleinhenz says that looking at national economical growth year-round, consumer spending has been a large component of the rising numbers. So it’s not a stretch to assume this year’s holiday spending won’t also increase and help the economy.

“If you look at the last 12 quarters, the economy has grown 2.2 percent and 1.5 percent of that is attributable to the consumer. It has been a key driver to the economy and has been very resilient,” he says. In the third quarter alone, when the economy grew at a 2.0 percent annual rate, the Commerce Department said rising consumer spending alone contributed 1.42 percent to the overall rate of growth.

Beyond its ability to predict consumer spending, the real importance of holiday hiring is in offering more work opportunities to the unemployed and underemployed— especially at a time when funds are tight.

In addition, many of the temporary jobs turn into long-term employment opportunities after the holiday season is over. For example, retail giant Target says it retained about 30 percent of its seasonal team for year-round positions.

“If people don’t have jobs at all, [temporary retail work]it does provide them income,” Koropeckyj says of the benefits of temporary jobs. “For people who are perhaps not seeing raises in the jobs that they do have, temporary jobs enable them to get second jobs to supplement their income.”

She adds that there are other perks to working in retail during the holidays, “Discounts can be taken from jobs. Certainly it helps them to be able to afford Christmas spending.”

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