Next Wave in Retail Job Loss Could Be From This Sector
Not so long ago, retail job growth moved to the warehouse, but now that could be shifting fast.
Warehouse jobs picked up with the rise of e-commerce and de-emphasis on in-store labor. But investments in technology and automation mean even those occupations seems to be on the decline, based on the latest jobs data.
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Total nonfarm payroll employment rose by 216,000 in December, the U.S. Bureau of Labor Statistics (BLS) reported Friday. Retail trade employment rose 17,000, reflecting little change from the prior month. Employment rose 14,000 in warehouse clubs, supercenters and other general merchandise retailers. But these gains were partially offset by a 13,000-job decline in the department store channel.
The 23,000 transportation and warehousing jobs lost are particularly troubling. While couriers and messengers lost 32,000 jobs in December, air transportation added 4,000 positions. But from a big picture point-of-view, the BLS data shows that since peaking in October 2022, employment in transportation and warehousing is down by 100,000 jobs.
Some of the warehousing job gains post-Covid came from supply chain disruptions that upended retail inventory as merchants fought to navigate those headwinds. Companies ramped up hiring in warehouses and distribution centers (DCs) and for other in-house logistics positions to bypass hiring outside third-party services. BLS data indicates that while apparel and accessories retailers shed 9,000 positions in May 2022, transportation and warehousing expanded by 47,000. Employment in warehousing alone rose by 18,000.
Walmart added 20,000 workers in 2021, with most of those jobs in logistics and supply chain roles. Dollar General also increased its workforce that fall, even after hiring over 50,000 employees by mid-summer.
But Walmart has sunk millions into technology and supply chain automation to gain a fulfillment edge and boost margins. Nine regional DCs servicing U.S. stores have varying levels of automation. And its third next-generation e-commerce fulfillment center opened last October in Lancaster, Texas, a 1.5-million-square-foot facility that should more than double both the storage capacity and number of customer orders fulfilled daily. Another is being built in Stockton, Calif., which should become operational in 2026 and expand the discounter’s next- and two-day shipping to nearly 90 percent of the U.S. These centers will help some Walmart associates transition into higher-skilled, tech-focused positions. At the end of December, Walmart was on track to add parcel stations to 40 stores and expedite last-mile delivery.
But by last April, Walmart began laying off more than 2,000 warehouse employees in five U.S. states, with more projected. A Walmart spokeswoman told SJ the “adjusted staffing levels” at some fulfillment centers address “the future needs of customers.”
Last May when April’s labor data showed flat U.S. retail job growth, The Conference Board’s senior economist Selcuk Eren said information services, transportation and warehousing and construction faced the greatest risk of layoffs, according to the board’s proprietary Job Loss Risk Index projections. That means that as retailers reengineer their supply chain, they’ll need fewer warehouse workers. However, new jobs could offset some of the declines as retail innovation attacks other areas of the business.
Another factor is influencing job growth in warehousing: sagging consumer demand.
Chief economist Jack Kleinhenz of the National Retail Federation, a retail trade organization, said Tuesday that while consumers spent more than expected in 2023 despite high inflation and interest rates, there could be a spending slowdown this year.
“A year ago, many commentators were skeptical and calling for a recession, but the recession never came. With each passing month, consumers kept spending despite inflation and higher borrowing costs,” Kleinhenz commented in the January issue of NRF’s Monthly Economic Review. “Nonetheless, those tailwinds are not necessarily sustainable.” Tight credit conditions, higher borrowing costs, and an expanding labor market could crimp spending.
Warehousing isn’t the only area of logistics where jobs are falling, with another digital freight brokerage, Uber Freight, reducing headcount.
FreightWaves first reported that roughly 40 to 50 jobs were cut Monday, with the Bay Area company confirming the layoffs to Sourcing Journal, but not the number of employees or departments impacted.
“We made a strategic workforce adjustment aligned with our continued commitment to drive sustainable growth. Regrettably, this means a small reduction in force,” an Uber spokesperson said. “This decision, not made lightly, optimizes the team to enhance operational efficiency and long-term success. We deeply appreciate the contributions of all team members and are providing support for those affected. Our focus remains on delivering excellence to our customers and creating sustained value for our stakeholders.”
The report indicated that impacted employees received their separation agreements via email on Monday, hours before they were laid off via one-on-one Zoom calls.
In January 2023, the freight brokerage laid off 150 employees, or 3 percent of its workforce. The company cut about 50 employees in a second round of staff cuts six months later.
Logistics firms in 2023 started making the necessary adjustments for an expected slowdown by cutting jobs as revenues began to fall. Last November, shipping container giant A.P. Moller-Maersk said it was cutting 3,500 jobs as part of a plan to shed headcount by 10,000 and get the total number of workers down to 100,000. And U.S. railroad operator Union Pacific was expected to eliminate 280 positions, or 5 percent of its 5,600 management jobs. Union Pacific’s total workforce is around 33,000. The cuts follow the 1,500 positions shed at trucking marketplace Convoy, the 1,200 lost at Flexport and the 30,000 jobs eliminated that resulted from the bankruptcy and liquidation of trucking giant Yellow Corp.
