The February release of the Kronos Retail Labor Index shows that in January 2010, retail applicants came back into the market in force, with a 20% increase in applications over December 2009. We had observed a seasonally adjusted decline in applications at the end of 2009, possibly due to workers becoming discouraged by their holiday employment prospects.
Hiring for January was also down, but by a smaller 4.26%. The good news is that although hiring was down compared to one month ago, it was up over one year ago, by 12%. The combination of greatly increased application volumes, combined with a reduction in hiring, led to a decline in the Index of 20.41%, to 3.20% (for every 100 applications received, 3.2 hires occurred on average).
In this month’s report we also introduce a new model of the consumer economy. Through this model we will use data to observe how three major markets interact: (1) the market for goods & services; (2) the financial markets which supply credit to consumers; and (3) the labor market which, through employment, enables spending, saving, and investing by consumers. We will introduce the different components of the model in upcoming reports in 2010.
The conceptual model introduced in the current report demonstrates how consumers’ motivation to increase their liquidity by decreasing their debt (negative liquidity), including exactly the kinds of revolving credit that retailers extend to stimulate purchases, correlates to the Index. According to the report, a “choke point” can be seen in late 2008, where at its peak the ratio of consumer liability to disposable income had reached 138% in the U.S. Since that point, consumers have reduced the amount of revolving credit for the first time since World War II. This has a direct negative impact on retail spending and thereby retail hiring.
What’s your attitude toward retail spending these days? Many retailers seem to be offering non-stop sales and promotions to loosen your wallet. Are you biting?