The unemployment rate has tumbled to its lowest level since the Vietnam War, making retailers’ task of hiring Santa’s little helpers this holiday season particularly challenging.
The U.S. economy added 134,000 workers last month, the Labor Department said Friday. Their gains were less than Wall Street had been anticipating, partly due to the impact of Hurricane Florence, a sign that companies might already be struggling to fill roles.
Upward revisions to the previous two months helped the unemployment rate fall to 3.7 percent — down from 3.9 percent in August and 4.4 percent a year ago. This is the lowest unemployment rate two-thirds of the U.S. population will have witnessed in their lifetime.
The shrinking unemployment rate is a sign of a strong economy and will likely boost spending at checkouts. But it’s not all good news for retailers since there will be fewer available workers to fill seasonal positions in their stores and distribution centers this holiday season.
Macy’s Inc. already said it is seeking 80,000 seasonal workers, while Target Corp. and Kohl’s plan to hire 120,000 and 90,000 employees, respectively, during the holiday period.
Retailers have also been struggling to fill full-time posts, with total unfulfilled job openings in the retail sector, not including fulfillment centers, IT and headquarters, totting up to 835,000 in July.
“The word is ‘challenging,’” said Jack Kleinhenz, chief economist at the National Retail Federation. “We know that there is a significant number of openings and in fact we’ve already heard that not only are retailers looking for seasonal workers, but they have been in the market for full-time employment also.”
The tight labor market means many retailers across the country will have to lure potential employees with a raft of benefits and higher pay this coming holiday season.
Amazon is already off to a strong start and plans to push up its minimum wage to $15 an hour at the beginning of November, while some of the perks on offer include J.C. Penney Co. Inc.’s drive giving some paid time off and 401(k) benefits and Kohl’s Corp.’s effort to entice workers with a 35 percent discount.
Melissa Hassett, vice president of client delivery at recruiter ManpowerGroup Solutions, said: “Sales representatives are in the top five hardest roles to fill in the U.S. We’re seeing companies across all U.S. industries take new approaches to attract and retain talent through a wide range of incentives.”
And it’s not just the holiday season that will be challenging. The unemployment rate is set to fall even further, with the Federal Reserve forecasting that it will hover around 3.5 percent for 2019 and 2020.
In the longer run, it’s expected to rise slightly to 4.5 percent, still less than half the 10 percent rate seen during the financial crisis.
“The U.S. economy is growing rapidly now, and we expect this trend to continue in the coming quarters, meaning that the demand for workers should not slow down,” said Gad Levanon, chief economist at the Conference Board. “In the past 12 months, the U.S. economy added over 2.5 million jobs. Will an economy at a 3.7 percent unemployment rate be able to add that many jobs in the next 12 months? That will be challenging.”
He expects employers to more rapidly do what they have been doing in recent quarters: automate, increase working hours and pull people back to the labor force, especially young men, whose labor force participation rate has barely recovered yet.