Seasonal Hiring Projected to Increase Holiday Season

While solid back-to-school sales boosted the confidence of retailers heading into the all-important holiday season, the possibility of increased sales this year may not be enough to spur a significant increase in seasonal hiring, according to the outlook released Monday by global outplacement firm Challenger, Gray & Christmas, Inc.

In its annual holiday hiring forecast, Challenger estimated that seasonal job gains are likely to be slightly higher than a year ago but still below pre-recession levels.  Those hoping to take advantage of the seasonal hiring should act early, as several sizable hiring plans announced by major retailers in September suggest that recruiting may start before October.

Last year, retail payrolls saw a non-seasonally adjusted net gain of 660,200 workers from October through December.  That was up just 1.9 percent from 2010, when retail employment increased by 647,600 workers during the holiday hiring season.  Prior to the recession, from 2004 through 2007, retail employment grew by an average of more than 722,000 over the final three months of the year.

“The economy has continued its slow recovery and surveys of retailers show that they are hopeful for solid sales gains this year.  However, recent consumer confidence readings have been relatively week and unemployment remains stubbornly high.  The mixed picture is likely to compel retail employers to proceed cautiously when it comes to hiring extra workers for the holiday season.  Look for many to start at last year’s levels and hire additional workers only if strong sales early in the season warrant it,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“Last year, retailers added just over 660,000.  This year, that figure could approach 700,000.  There is still too much uncertainty to expect seasonal employment gains to reach the level we saw in 2006, when retailers added nearly 747,000 extra workers at the end of the year.  We may never again reach the level of hiring achieved in 1999, at the height of the dot.com boom, when nearly 850,000 seasonal workers were added,” he added.

One factor that may damper retail sales this holiday is consumer confidence, which fell from a reading of 65.4 in July to 60.8 in August, the lowest level since last November, according to the Conference Board.  Consumer optimism slipped the most in regards to future business conditions and job prospects, which could weigh heavily in holiday spending decisions.

At least one major retailer that announced early hiring plans intends to add fewer holiday workers.  Last week, Target reported plans to add 80,000 to 90,000 seasonal workers, down from the 92,000 it hired a year ago.

“Even if hiring at Target comes in closer to 80,000, it is still a lot of extra workers.  Job seekers looking for seasonal positions should not rule out Target or any other potential employer.  Last year, Target retained 30 percent of the seasonal workers it hired, which makes it an even more desirable prospect,” said Challenger.

General merchandise stores, such as Target, are typically the biggest generator of seasonal jobs.  Last year, this category alone added 308,600 workers during the holiday period from October through December.  That includes the 229,000 extra workers added by department stores.  Clothing and clothing accessory stores are the next most fruitful target for seasonal job seekers.  These establishments hired 195,100 workers a year ago.

There are some positive trends that could help retailers achieve expected sales gains.  Total payroll employment in August was up more than 1.8 million workers from August 2011.  As of the second quarter, median weekly earnings had increased to $773, compared to $756 per week during the same period a year ago.  Additionally, retailers experienced solid back-to-school sales, followed by increased sales in August.

“One other reason retailers may be holding out hope for solid holiday sales gains this year, is that despite the uncertainty of the economic recovery, Americans seem to find a way to scrape together extra spending money for the holidays.  They do not want to disappoint their kids, spouses, friends and the other people with whom they exchange gifts,” said Challenger.

“Kohl’s, one of the early announcers, plans to increase its seasonal hiring this year to 52,700, up from 40,000 in 2011.  Amazon announced plans to add 5,000 seasonal workers at its distribution facilities.  We can also expect big hiring plans from UPS and FedEx, which typically add extra workers to help handle the increase holiday shipping,” noted Challenger.