“If I had to chose a time in history in which I could be born, I would choose June, 1, 2016. In the future, we will be far better off in every dimension,” Joel Mokyr, professor of economics and history at Northwestern, said in a phone conversation last week. Mokyr wanted to conclude on a positive note. But June newborns weren’t our conversation’s primary demographic.
Our talk was more concerned with a subset of people born on June 1, 1966, their contemporaries and those born a decade or so before and after. That subset: traditional retail employees.
This story first appeared in the June 8, 2016 issue of WWD. Subscribe Today.
The first-quarter retail results that came in recently were mostly abysmal. On the heels of those results, May’s job numbers out last week showed a loss of 4,100 jobs at apparel and accessories retailers.
Asked about that one-two punch, Jack Kleinhenz, chief economist of the NRF, maintained that overall, the state of retail is strong, “growing modestly and consistently…” he wrote in an e-mail. “Retail employment continues to grown on an annual basis. In March 2016, there were more than 564,000 job openings within the industry and 737,000 hires according to the [Bureau of Labor Statistics] JOLTS report.”
Kleinhenz addressed the layoffs only obliquely: “Shifting a company’s resources is a tough decision made every day by businesses in a variety of industries, not just in the retail world. And retailers are making these decisions as part of their ongoing strategies to change and evolve to meet customer demands. Retail is going through an evolution and change is inevitable.”
Exactly. As Kleinhenz pointed out, some job loss is about more than general economic vicissitudes. At the retail level, the department store model is under universal duress. Modern life in general is in the throes of a riotous tech-driven revolution. On the other side, it may indeed be better for all, a glorious click-here/click-there cyber Utopia. (If there is the other side. Who knows? Constant high-stakes, high-speed, high-trauma change may just be the new normal.) Certainly all kinds of new jobs, many we can’t even fathom now, will be created, while others fall prey to Rhonda the Robot. The big-picture future of work is a fascinating and complicated topic.
But that unfolding Jetson-ian big picture isn’t the only picture that matters. In the present and short-term future, more retail employees will see their jobs lost either to literal tech takeover of the position (when’s the last time a human scanned your toothpaste at CVS?) or by the increasing encroachment of e-commerce on bricks-and-mortar. I’m going to buy my underwear online or in a physical store. I’m not going to buy it twice.
Against this backdrop, where does the rank-and-file retail employee, let’s say the sales associate, stand? We work in a huge industry. It’s a business. Our business’ primary concern for the human condition relates directly to consumerism. That’s not to say companies don’t care about people — whether their own people or the world’s people. Reams of evidence indicates they do. But corporate h.r. initiatives and global philanthropies aside, the first concern of business is business.
For employees, the human side plays out, often on very intimate terms. What’s to become of individuals and generations of workers, if and when they’re laid off? What’s the psychological weight on an employee who lives in constant fear of being next? The impact on communities of mass layoffs due to, say, a major store closure?
In historical terms, jobs made archaic in one sector may convert to other types of jobs. The oft-cited historical example: The shift from an agrarian to manufacturing economy. As late as the Civil War years, between 53 and 58 percent of U.S. workers were agricultural; today it’s less than 2 percent. “Where did all of the farmers go?” Mokyr poses. “A lot of them [had trouble] adjusting, and there were farm protests and farm movements. But in the end, [progress] couldn’t be stopped. Most of the farmers and their offspring moved to the cities and worked in service industries. These things happen all the time. [Otherwise], you’re basically living in a stagnant economy, and in many ways, that’s even worse.”
Most of us are probably supremely subliminally grateful for those forces that led our forebears to pack up their wheel barrows and head city-way. Through our current tech-driven social revolution, the workforce will, knock wood, adjust and prosper. That’s large-scale and over time. Right now, what are the small-scale prospects for a laid-off retail employee? It depends upon many factors — skill set, age, mojo. The best work ethic in the world can’t change certain realities. A 50-year-old who has been on the selling floor of a major department store for 30 years is likely ill-equipped in terms of current skill set to do anything else, and probably even less equipped financially to retire. Even if such a person is tireless, whip-smart and willing to retrain, what are the prospects really, and the prospects for similarly unemployed workers, multiplied by 4,000 in a given month and many thousands more over the course of a year?
In the short run, people — people with families, mortgages, tuitions, Con Ed bills and a possible lifespan into their 90s — are suddenly adrift, with the clock ticking on unemployment benefits.
Those workers who find new employment typically take a significant cut in pay. Younger workers may recoup those losses over time; older workers almost certainly will not. “Losing a permanent job, which you’ve had for more than six years or so in a sector where you’ve had a lot of specific skills, there’s a large psychological cost and there seems to be some health effect,” says Lawrence Katz, professor of economics at Harvard. “This is very worrisome for a lot of people. Less so for the 28-year-old who has a lot of other possibilities. For 50-year-olds who have worked 25 years in this sector, we don’t do a whole lot. There are few training opportunities.”
Should the private sector or a specific industry or company bear responsibility to displaced workers beyond paying into unemployment? Absent legal responsibility, which is virtually nil, moral responsibility is moot for a company fighting for its own survival. “Some large employers will provide outplacement services,” says Katz. “For companies that are in severe financial distress like current department stores, I doubt you’re going to see that sort of treatment.”
Katz advocates for the development of a wage insurance program similar to unemployment benefits. Such insurance, he explains, would “cover half the gap in your wages. It would decrease over time. So say you take a 50 percent wage cut while you’re starting in the new sector, we’ll get it back up to 75 percent. Over time, while your wage rises, we will cut back the amount that we need to provide as you get into a stronger trajectory.” Obviously, such a program would benefit only the underemployed, leaving the unemployed on their own. A similar insurance program could fund retraining initiatives. Katz says that some European countries have experimented with such initiatives. In the U.S., wage insurance, supported by President Obama, has gone nowhere in Congress.
I’m not advocating for it. I don’t know nearly enough about it to offer an intelligent opinion not co-opted from Katz. Nor can I here even get to several talking points made by Katz and Mokyr in brief, and what were likely for them, barely surface-scratching conversations. I do know that as more retail migrates online, more employees who clock in every day at physical stores will find their employment threatened. Their plight deserves proactive industry-wide consideration.