Hourly retail pay rises as industry struggles
Despite an industry shakeout that’s been dubbed the retail apocalypse, store workers who have hung in there are seeing better pay than a generation ago, even with inflation.
Minimum wage increases by states and across major chains, like Walmart and Target, coupled with a tight labor market, have initiated the income gains. Average hourly earnings for 13.4 million nonsupervisory retail workers surged 5.1 percent last year for the biggest advance since 1981, according to the U.S. Bureau of Labor Statistics. And they’ve kept rising, hitting $16.65 an hour in July. When adjusted for inflation, that’s the highest level since December 2003.
But it’s important to remember that while retail workers are getting paid more, there are fewer of them. The industry’s payrolls peaked in January 2017 with department stores and clothing chains hit especially hard since then. A mix of online competition, too much debt and mismanagement have recently wiped out chains such as Toys R Us, Bon-Ton, Payless and Gymboree. Meanwhile, operating chains, like Sears, J.C. Penney and Gap, continue to shutter underperforming stores and cut jobs. And all this has come amid the longest economic expansion in U.S. history, plus the highest-sustained consumer confidence levels in two decades.
And while retail associates have made recent gains, they still earn much less than hourly workers in many other sectors. They are now making 29 percent less than the average for all nonsupervisory employees, just a marginal improvement from 30 percent a decade ago. Inflation-adjusted retail wages also still have a ways to go to surpass their levels in the 1970s, even as pay for hourly workers in general last year finally passed their inflation-adjusted 1973 peak.
Retailers are still vying for workers amid historic low levels of unemployment, even with the falling total payrolls. The gig economy, powered by firms like Uber and TaskRabbit, has sucked away a lot of potential retail workers with its flexible beyour-own boss appeal. That’s pushed rates for retail job openings higher than in other industries, a development that has also boosted wages faster. Hourly pay for all nonsupervisory workers rose 3.5 percent last year.
As the largest employer of hourly workers in the country with about 1.5 million associates, Walmart has been a major catalyst. The retailer boosted its minimum hourly rate to $9 an hour in 2015 and has since pushed it to $11. Meanwhile, Target upped the ante on its rival by hitting $13 an hour in June, which is part of a commitment to reach $15 by 2020.
As a result, hourly associate pay in the general merchandise retail category, which includes discounters like Walmart and Target, has jumped 26 percent since 2015 to $14.85. This is by far the best stretch of gains since the Bureau of Labor Statistics started breaking out data on this sector in 1990.
Over the past few years, states mostly led by Democrats have boosted minimum wages while the federal standard remains stuck at $7.25 an hour. California, Colorado, Arizona, Maine, Massachusetts, New York, Oregon and Washington state are all at $11 or $12 an hour. And more increases are on the way.