retail watch | Nov 11, 2021 |
Retailers are maxing out on minimum wages, but will it be enough?

Remember when the retail business was considered a sector that underpaid its employees yet never had much trouble attracting workers, even with those lousy wages? My, how things have changed.

Along with much of the rest of the American workplace, retailers are struggling to fill all their vacant positions—a situation that becomes all the more critical as the calendar shifts into the prime Christmas shopping season, when stores (and the distribution centers that are increasingly important in the overall selling picture) hire hundreds of thousands of temporary workers to handle the holiday crush.

This week, Macy’s became the latest big national retailer to raise the stakes by announcing that it was moving toward a $15 minimum wage for all its employees, a process the company expects to complete by May 2022. But just paying workers more is only part of the plan. The company—the largest department store retailer in the country, with more than 600 stores and an estimated workforce of some 130,000 people—also said it would spend $35 million on a debt-free educational benefit program for its employees over the next four years.

In increasing those paychecks, Macy’s joins a bevy of American retailers seeking enough warm bodies to keep business running. National unemployment numbers are back down to pre-pandemic levels, and just about every sector—from trucking to fast food to general office work—is resorting to drastic measures to attract employees. Companies that are insisting upon return-to-office mandates—most recently Hearst Magazines—are facing serious pushback from their existing workforce, which has grown used to working from home and isn’t interested in going back to the way things were.

Of course, working from home is not an option for the physical retailing business, whether in stores or warehouses. That’s why the sector is especially vulnerable to current conditions—and why brands like Macy’s are moving ahead with aggressive efforts to attract workers.

Amazon, the biggest online retailer in the country (and the U.S.’s second-largest private employer, behind Walmart), recently announced it is upping its starting wages to $18 an hour, which comes on the heels of the $17 hourly rate the company instituted just this past May. Dave Bozeman, vice president of Amazon Transportation Services, told Reuters that the company is also offering signing bonuses of $3,000 in some locations—all in response to the need to hire 125,000 more workers as soon as possible.

Other retailers are employing similar practices. Walmart says its starting hourly rate now averages $16.40, and the big drug chain Walgreens Boots Alliance (comprising Walgreens and Duane Reade in the U.S. and the Boots chain internationally) is up to $15. Even Ikea says it is raising its starting rate to at least $16 an hour, with pay as high as $20 in some markets—and that includes wages for part-timers as well as full-time and seasonal employees. The Swedish retailer is also polishing up its benefits package with better health care.

All of this comes as consumer prices rose at their fastest pace in 31 years this past month, with many economists specifically citing labor costs as a major contributing factor. These hourly rates are also set against the backdrop of the federal minimum wage—which, as a refresh, is $7.25 and hasn’t increased since July 2009. For anyone counting, that’s 12 years and about 640 weekly paychecks ago.

Homepage image: Adobe Stock | ©eqroy

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