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Prospects Continue to Dim for Holiday Retail Jobs

Stephanie Clifford and Catherine Rampell
Wednesday, 6 Oct 2010 | 2:47 AM ET

As the economy sputters, prospects are dimming for unemployed workers who were banking on a seasonal retail job to carry them through the holidays.

After a disappointing back-to-school season, many retailers say they intend to barely increase their seasonal jobs from last year, when hiring was among the lowest in the 14 years tracked by the National Retail Federation.

Some big national chains — like Wal-Martand Best Buy— say they will not hire any more workers than last year. And even some of the more bullish retailers say the growth will not be significant.

“It’s a slight increase, it’s not a huge increase,” said Jim Sluzewski, a spokesman at Macy’s, which expects to hire 65,000 seasonal workers.

The recruiting firm Challenger, Gray & Christmas, forecasts that retailers will add up to 600,000 jobs in October, November and December, compared with a net gain of 501,400 holiday jobs over the same three months in 2009.

“This is slow digging out of a deep recession,” said John A. Challenger, the firm’s chief executive.

Temporary hiring is often a way for employers to test the waters before committing to permanent hiring, which is why the big gains in the temporary help services industry in the fall of 2009 — hiring unrelated to the holiday retail season — brought hope last year that the job market was turning around.

But it is hard to get excited about the holiday hiring announcements this year, retail analysts said, as many companies are adding workers largely because they are entering the season with lean full-time headcounts. And in the cases of chains like Toys “R” Us and Borders, there is little possibility that the temporary workers will become permanent because many are being hired to work in so-called pop-up stores — temporary stores on short leases.

Toys R Us Express
Source: Toys R Us
Toys R Us Express

“It’s all a way of managing risk, given how much uncertainty there still is out there,” said David Weil, an economics professor at the Boston University School of Management.

“These companies are buying themselves more flexibility by relying more on temporary workers than in the past. If the season doesn’t develop as they’d hoped, they’re not on the hook in the same way,” he said.

It is also not clear when the seasonal hiring will happen.

Challenger Gray expects that companies may wait to hire until November or December — once they have a feel for how much consumers are willing to spend.

In a report to be released on Wednesday, the National Retail Federation projects that holiday retail sales will increase 2.3 percentover their level in 2009.

Among the retailers adding workers, Toys “R” Us said it would hire 45,000 workers, compared with 35,000 last year; the 10,000 additional employees will staff 600 pop-up stores. J. C. Penney said it would hire 30,000 workers, “a slight increase over last year,” a spokeswoman, Darcie M. Brossart, said in an e-mail.

“We align our store staffing with expected customer traffic,” she said.

Other retailers say they will keep holiday staffing on par with last year, including Wal-Mart and Neiman Marcus, which do not specify the planned number of hires, and Best Buy, which said its 29,000 holiday employees would be about the same as last year.

Over all, full-time work in retail is slightly down. The number of people employed in the retail sector in August fell 4.9 percent, to 14.4 million, from a year earlier, according to the Bureau of Labor Statistics.

The jobs themselves are also less than ideal for many struggling families, given that they often lack benefits and provide unpredictable and relatively short hours.

Even before the recession began, the typical retail worker’s week had shrunk to fewer than 32 hours, according to the Bureau of Labor Statistics. Still, adding low-wage retail jobs can help give a kick to local economies.

“These jobs are typically going to people who spend 100 percent of their income just to get by,” says Françoise Carré, research director at the Center for Social Policy at the University Massachusetts-Boston.

“So if you’re looking at local income,” she said, “that’s a good thing because it puts money in the hands of people who go out and spend it versus people who just save it.”

While retailers are just now making plans for Christmas hiring, they had to make plans for Christmas merchandise months ago, and that lag might create some inventory problems.

In the first part of the year, the economic picture looked much brighter. In March, retailers tracked by Thomson Reuters turned in the highest gain in sales in stores open at least a year, a 9.1 percent increase, since Thomson Reuters began covering those figures in 2000.

That was at about the same time that retailers had to order holiday merchandise because of the time it takes to produce and ship the inventory.

And recent traffic at the nation’s ports suggests that retailers made optimistic bets. The Ports of Long Beach and Los Angeles, which together handle about 40 percent of all American imports, said that in August, one of their highest-traffic months due to the arriving holiday shipments, they imported about 710,000 containers of goods. That is slightly more than the ports handled in August 2007, when the economy was roaring.

Demand for freight space, especially from retailers, has been so great that shipping lines have added vessels back into their fleets, said Richard D. Steinke, executive director for the Port of Long Beach.

“Freight rates are dropping and capacity is back,” he said.

All that stuff coming into ports means that some retailers may have been too hopeful and ordered too much inventory back when the economy looked better.

“Some retailers may have incorrectly extrapolated into the future, and may have placed excessive merchandise bets back in the spring for this Christmas,” said Robert F. Buchanan, a finance professor at St. Louis University’s Cook School of Business who studies retailers.

“That could hurt them come this Christmas, if Christmas is as slow as I think it will be,” he said.

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