Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Commentary

Retail Jobs Apocalypse is worse than you think

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There is strong evidence that the retail jobs apocalypse is more widespread and destructive than most people think.

Around 80,000 department store jobs have disappeared since 2013, The Federal Reserve Bank of New York’s Liberty Street Economics blog reported. That trend has largely been ignored because the total retail industry added around 100,000 jobs during that period.

Most concerning is evidence that the apocalypse has accelerated over the past year. Around 32,000 department-store positions were cut between July 2016 and July 2017.

What’s truly disturbing is that not all of those unemployed by the department die off, appear to be finding work. During the same period, online merchants added around 29,000 people meaning that 3,000 people or nearly 10% of the unemployed retail workers may not be finding work.

Destructive Effects of the Retail Job Apocalypse

The New York Fed’s data shows how widespread the retail jobs apocalypse has become. Some disturbing highlights of the process include:

  • 75% of the 561 counties studied by the Fed lost department store jobs between 2012 and 2017.

  • The rate of overall employment fell in 75% of the counties the Fed studied between 2012 and 2017.

 

  • The percentage of jobs created by non-store employment (online retailers) is tiny. Such positions comprised just .5% of the work in the country in 2016.

 

  • Online retail jobs pay far better than department-store work. The average online worker took home around $59,000 a year compared to $20,500 a year for a department-store employee.

 

  • Online-retail job growth is concentrated in certain geographic areas, while department store job growth is spread out across the country.

  • A major problem is that new online retail jobs only appear in a few specific locations such as counties with an Amazon fulfillment center.

 

  • The total level of retail employment is largely unchanged since 2013.

 

  • The number of new retail jobs 100,000 created over the past four years still exceeds the number of lost department store positions; 80,000.

 

  • Detailed job data for many areas is no available meaning that the true extent of the apocalypse is hard to gauge.

  • The number of department store employees has been declining since 2002 when it hit a peak of around 10.8 million. Today around 10.3 million people are employed in “department stores” a category that also includes giant retailers such as Walmart.

 

  • Job losses might get far worse with the big wave of store closings announced at retailers such as Sears (NYSE: SHLD).

 

It looks as if the havoc being wreaked by the retail apocalypse is worse than we thought. This study also gives us a rough picture of the future of retail employment and it is not pretty.

There will be fewer jobs in fewer places in the future but they will pay more. That means more competition for fewer jobs between employees and communities. Expect to vicious battles break out between labor and management, local and state governments, and between workers as jobs get scarcer.

Sears Canada is dead

Things are worse in Canada, all Sears Canada stores are closing and face liquidation starting on October 19, 2017, Markets Insider reported. A press release indicates that liquidation at 82 stores beings on 17 October 2017.

Remaining merchandise will be sold off at a 50% discount in an attempt to recover money lost by investors and creditors. All Sears Canada stores will close and all employees will be laid off, which means the brand is dead. Around 131 stores will close and 12,000 employees will lose their jobs.

In the United States, Sears is closing 28 more Kmart locations in addition to the 180 shut down earlier this year, CNBC reported. One store in North Miami Beach will remain open until mid-December the rest will close by mid-November before Black Friday.

Retail jobs might soon be a thing of the past, the effect of that will be devastating. It will carry over to many other aspects of our society including politics. Expect to see serious upheavals because of this.