January Retail Labor Index

The January release of the Kronos Retail Labor Index report provides results for the December 2009 Index as well as a year-end recap of trends in the applicant population.  The December Index level was the highest of 2009, at 4.02% (for every 100 applications received, 4.02 hires were made).  This result appears to be driven by a continued decrease in applications (the lowest since August 2008) which outweighed a 7.1% decrease in hirings relative to a year ago.

December unemployment numbers from the Bureau of Labor Statistics show that while unemployment remained constant at 10 percent, the “underemployment” rate, which includes those who have given up looking for work and those employed part time for economic reasons, rose slightly from 17.2% to 17.3%.  We will be watching Kronos application levels closely to see whether recent declines in application volumes are  the result of discouraged unemployed workers giving up on applying, or whether they reflect early signs of an improving labor market.

Holiday 2009 recap. In reviewing the holiday hiring season, which typically is in full swing by October, some interesting dynamics emerged when we compared 2008 and 2009.  September and October Index levels were far higher in 2008 than in 2009, with a new all-time low reached in September 2009 (2.58%), and with only a slight rebound in October 2009 (2.90%).  These numbers reflect the extreme caution with which retailers approached the holiday 2009 season, after being burned by low sales and heavy discounting in 2008.  However, a hiring surge in late November, combined with a decrease in applications, pushed the November 2009 Index above the November 2008 level.  This trend evened out in December, with December 2009 and December 2008 Index levels at the same 4% level.

These Index patterns reflect overall trends in holiday season sales.  In 2008, the extremely weak holiday sales surprised retailers; accordingly, hiring rates were relatively strong early in the season in September and October 2008.  After this experience, and in light of sales projections, retailers held back on hiring in September and October 2009, planning to add staff on an as-needed basis.  By November 2009, with retail sales at an adequate level - 1.3% higher than in November 2008, according to the Census Bureau - retailers were confident enough to add staff in the latter half of November; seasonal sales were weighted towards the end of the season, with December same-store sales posting a 2.8% increase over December 2008, according to the International Council of Shopping Centers.

2009 and the changing applicant pool. Our analysis of application data collected via the Kronos hiring system has revealed some interesting trends which reflect wider changes in the labor market and unemployment rates.  Highlights include:

• The percentage of male applicants in the 25+ age group has increased from 45% in Q4 2006 to 52% in Q4 2009.  This reflects the disproportionate loss of jobs by men employed in construction and manufacturing.  As a result of job losses in these sectors, more men have entered the retail labor force, and within this age group, men now comprise the majority of applicants.

• We did not see such a change in the “traditional” retail labor pool - high school and college-age applicants.

• The applicant pool is becoming older as more experienced workers are competing for entry-level jobs with younger workers.  The percentage of Baby Boomer applicants has increased since 2006 from 6.2% to 8.3%, while Generation Y's share has dropped from 79% of the total to 74%.

• Historically, a segment of the population sought part-time retail work either for supplemental income, or to work part-time for lifestyle reasons (for example, as a second household income).  Those specifically seeking part time work have decreased from 43% of the total in Q4 2006 to 34% in Q4 2009.  Less confident of their ability to find work at all, a larger percentage of applicants will now accept either part time or full time work.