Holiday Jobs Look Scarce as Pessimism Grips Retail

From the Wall Street Journal | SEPTEMBER 23, 2009 By ANN ZIMMERMAN and ELIZABETH HOLMES

Nearly
half the nation's 25 biggest retail chains expect to hire fewer holiday
workers this season than they did last year, another sign that
retailers aren't counting on recession-strained shoppers to relax the
tight grip on their pocketbooks this year.

About 40% of stores surveyed across a broad swath of retailing, including consumer-electronic chain Best Buy Inc., teen-retailer American Eagle Outfitters Inc., and luxury-goods seller Saks
Inc., told the Hay Group, a human resources consulting firm, that they
expect to hire between 5% and 25% fewer temporary workers this year
than last, when the recession forced many retailers to trim staff in
response to falling sales.

That's a grimmer outlook than the Hay survey found a year ago, when
29% of retailers said they would be slashing their holiday workforce.

"Our staffing levels will likely be down slightly," said an American
Eagle spokeswoman. "We've been focused on creating high levels of
efficiency." Saks declined to comment and Best Buy wasn't available to
comment.

Retailers typically bulk up their staff by up to 10% in the fourth
quarter, the period that typically accounts for their biggest sales and
profits of the year.

The survey results deal another blow to the retail job market, which
has been hurting in the weak economy. Since the recession began
officially in November 2007, the retail sector has lost 850,000 jobs,
or about 6% of its workforce, according to the Bureau of Labor
Statistics. Only construction and manufacturing have lost more jobs.

"Retailing employment will take another large hit if this plays out
as retailers expect," said Lawrence Katz, a labor economist at Harvard
University.

In a typical Christmas season, the retail sector contributes about
700,000 temporary jobs to the economy. If retailers decrease those
numbers by 10% to 20%, that would translate to a potential loss of more
than 100,000 jobs this year just when they are most in demand.

"These are typically jobs for the least skilled and with the least
opportunities, youth and people entering the job market," Mr. Katz said.

Seasonal employees frequently are teachers or part-time workers
looking to supplement their income with an extra job during the
holidays, and relying on their wages and store discounts to buy holiday
gifts. With unemployment hitting 9.6% last month, retailers are
reporting that they have more seasonal applicants than usual this year.

Alexis Zanis recently received a master's degree in library and
information sciences, but hasn't been able to land a full-time job. So
recently she began applying for retail positions.

Ms. Zanis, 25 years old, worked seasonal retail jobs while in
college and, out of desperation, hoped to do so again this year. She
stopped by Coach, Crate & Barrel and Old Navy, to submit
applications last week, but hadn't yet heard back from any of them.

Ms. Zanis said she plans to continue applying at stores until she's
hired, figuring it's her best bet to find work right now. "It's not
just seasonal, I need a job," she said.

The results of the Hay Group seasonal hiring survey reflects
retailers' pessimism about the holiday sales season, despite the stock
market's recent strong performance and evidence that the recession is
abating.

A third of retailers in the survey said they expect sales during
Christmas to decline 5% to 25% this year. Another third expect sales to
remain the same as last year. Researcher Retail Forward estimates last
year was the worst selling season in 42 years with sales declining 4.5%
in the fourth quarter. It also issued a forecast predicting sales will
be flat with last year's weak numbers.

"Retailers are not planning inventory or staffing for any sales
growth this holiday," said Craig Rowley, vice president of the global
retail sector for Hay Group.

Fewer holiday jobs will only make retail sales worse, said Mr. Katz,
the Harvard labor economist. "It is what we call the multiplier effect
-- consumers are pessimistic about the jobs market, so they are not
shopping as robustly, and as firms continue to not hire or lay off
workers, consumers get more pessimistic," he said.

About 64% of retailers already have reduced staffing levels going
into the holiday season. Stores have spent the year trying to cut costs
and boost profit margins, in part by trimming workers to align with
slower sales.

Some retail experts expect the industry to operate at lower staff
levels even after the economy improves. Jeffrey Swartz, chief executive
of Timberland
Co., the manufacturer and retailer of outdoor wear, said he keeps a
four-and-a-half page list in his desk of employees he had to let go in
the downturn and hopes "not to commit the same sin again."

Macy's Inc. and J.C. Penney
Co. expect to add staff for the holidays. Macy's will hire "essentially
at the same level as last year," said a spokesman. Penney said its
seasonal hiring "will remain unchanged."

Write to Ann Zimmerman at ann.zimmerman@wsj.com and Elizabeth Holmes at elizabeth.holmes@wsj.com