Organizations Take the Long View on Labor Shortage
As fashion retailers, manufacturers and distributors struggle to not just hire employees but retain them, some companies are offering quick fixes like signing bonuses and hourly wage increases.
The U.S. Labor Department reported that pay increased by 3.5 percent in the private sector for the year ended in June. That uptick signaled the biggest jump in more than 14 years and some businesses’ willingness to adopt new strategies. Under Armour recently upped its hourly wage for retail and distribution employees in the U.S. and Canada to $15 an hour, while CVS Health no longer requires job candidates have high school diplomas.
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While last month’s national unemployment rate weighed in at 5.4 percent, according to the U.S. Bureau of Labor Statistics, several states were considerably steeper. Nevada, for example, was at 7.7 percent and California, New York and New Mexico all hit 7.6 percent. In addition, about 6.5 million people were not in the labor force but want a job. Despite these figures, companies in many sectors are scrambling to staff up.
Education is one means that some large employers are offering to entice more workers. Last month Walmart revealed a plan to its 1.5 million part-time and full-time employees offering to pay for all of their college tuitions and books.
Matthijs Crietee, deputy secretary general at the International Apparel Federation, spoke of how collaborating with schools is integral to the industry’s future. “The strength of the industry depends on people. That’s why education is one of the main pillars that an organization like the IAF is always looking at. And the collaboration between industry and education is really important. Educators need to understand what the industry needs and the industry needs to understand what educators can do, what their insights are and how they can work together to attract talent and to make sure that the people being trained now leave the schools with the right skills and knowledge for four years onward.”
While some analysts and economists have speculated about how federal stimulus checks, extended unemployment insurance benefits and child tax credits have impacted people’s decisions to return to work or seek new jobs, there are other factors at play. Concerns about remote schooling, the risk of contracting the Delta variant and the cost of child care are factors being considered by many thinking about whether to return to the workforce.
Adam Lukoskie, vice president of the the National Retail Federation’s Foundation, said the industry is “doing a ton” to address the shortage by evaluating wages, scheduling and offering more virtual job fairs for hourly store associates and corporate roles. Through its Rise Up program, the organization is working with 1,200-plus training programs for high schools, community colleges, Goodwill, Boys & Girls Club of America and other organizations. “We’re doing everything within our ability to make folks out there know what jobs we have and what the jobs currently require. Some have outdated views of what a retail job is or its salary or hourly wages. We’re also rolling out warehouse logistics training next month, given the explosion of new jobs in that part of our industry,” he said.
In the last few years, credentials have been approved in different states as part of their technical education programs such as in Arizona and Louisiana. Through a partnership, the Boys & Girls Club of America will incorporate its retail industry fundamentals into a platform they use with club members. Five clubs in the U.S. are taking part in the pilot program, which involves the participation of select retailers to bring that curriculum to life, Lukoskie said. It will be introduced to other clubs later.
All in all, he is encouraged to see that people continue to look for work, that businesses are getting more creative about recruiting and are simplifying application processes and making them faster for job seekers. “Not just retailers, but everyone is being forced to communicate more concisely and quickly. In response to that, jobseekers are actually looking.”
Addressing the need for agility in the year ahead, Lukoskie said, “Everyone is just trying to get used to the unpredictability. You think one thing and two weeks later, it’s here-we-go-again whether it’s pandemic-related, regulatory-related or economically-related…but we’re seeing it’s forcing industries, not just retail, to move faster. What could have been a decision that took 12 months to be rolled out, now in some cases is being rolled out in two to four weeks,” he said.
As for whether how some of the ways that different retailers handle the labor shortage could lead to greater automation and potentially fewer jobs down the road, Lukoskie mentioned how the introduction of new technology in some stores still requires manpower. “Sometimes it just looks a little different. With Rise Up, we’ve been looking at how it tends to involve having a little more skills and technical knowledge,” he said, adding that store associates now must know how to troubleshoot problems at self checkout kiosks.
As in-store pickups gain popularity, employees are needed to assist those customers and also gather their purchases. “It just requires a higher level of mentoring. I don’t think the jobs are going away. They are just changing. Then again, if more people are shopping online, which is a massive form of automation, we’re seeing all of the warehouse jobs pop up and logistics jobs pick up,” Lukoskie said.
Lynne Fox, international president of Workers United, said the labor shortage started to be evident two years ago and COVID-19 exacerbated the problem. “While shutting down was hard, reopening was even harder and now we’ve got the labor issues. As I look back at it philosophically, the one gift that COVID-19 left behind is that labor and management unequivocally realize that we have a lot of common interests and goals. And they’re not going to be achieved unless we work together,” she said. “Unionized employers and workers are in a much better position to deal with this because it’s not just a wage issue. We’re really focused on the whole package, and getting people in and retaining them.”
She emphasized how her team is focusing on a holistic approach in collective bargaining agreements — wages and all benefits including life insurance, disability insurance, pensions, vacation time and more. Media coverage of the labor shortage tends to center on the hourly wage without taking into account any benefits that have been negotiated. “Of course, I have a bent toward unionization but that’s what those contracts deliver,” she said.
She said it’s not just about a worker’s hourly wage, but also about taking care of someone at work for the whole picture. “I see all of these companies trying to attract people to come to work by offering an extra dollar or an hour, or a $1,500 bonus. But what is the point of all that, if you have to pay for your own insurance or you have no disability insurance? If you can work, you’re OK but if you can’t work, you’re not OK. What good is that if you don’t get any time off — no sick days, no vacation, no personal days,” Fox said.
Arguing that the recognition that the living wage is no longer a minimum wage or $10 or even $15 an hour is one the U.S. needs to get to, Fox said. “You can’t sustain a life, raise your children, live in a decent place, pay for education on $10 or $15 an hour. Something more global has to be done to recognize that. Employers, who were against it saying they wouldn’t be able to afford it, are now recognizing that without doing something, they’re not going to have a workforce.”
Jeff Chiu/AP
Fox also contends that employers who cover insurance for employees should get some kind of rebate, reward or acknowledgement. As for how some people do not consider the burgeoning area of distribution jobs to be as appealing as in-store positions, she considers distribution ones to be “a very viable, middle-class job now. It used to be manufacturing — much of that was shipped offshore in the ’90s. Now it’s the distribution and service sectors that really are the mainstays of the middle class. We need to acknowledge that and make these places good places to work with complete benefits,” Fox said.
Looking at the situation from the luxury sector, Luca Solca, senior research analyst for global luxury goods at Bernstein, said that demand has rebounded so sharply that there have been reports of product shortages and rationing. “Best-in-class companies can flex their manufacturing muscles by leveraging their own facilities and third-party manufacturing associates. Operations flexibility is of the essence to be on top of the competitive game,” he said.
Crietee of the IAF, which represents national and regional organizations in countries including India, the Netherlands, Brazil, Germany and Italy, among others, said the labor shortage was an issue in fashion for decades in different regions. IAF has about 80 members of which 25 are industry associations representing about 40 countries. Noting that one Chinese association has 20,000 members, Crietee said the number of members of IAF member associations would tally hundreds of thousands of workers.
The labor shortage has been an issue pre-COVID-19 due to the apparel and textile sector being a mature, established industry that competes with others for personnel, Crietee said. The challenge of attracting young people to the industry is a recurring issue that southern European IAF members are dealing with. Enticing the next generation to get the education they need to work in the apparel sector is another hurdle, according to him.
Areas that specialize in manufacturing like Pakistan or Bangladesh are not facing as much of a structural shortage of workers, as they are trying to meet clients’ demands for greater flexibility and speed. That in turn calls for more training for employees as quickly as possible to bring their skills up-to-speed.
Offering child care, health care facilities and housing help to attract women to businesses. Companies also “need to sell themselves” as employers and “to show that this is an interesting industry to work for” by visiting high schools and fashion schools, Crietee said, adding that some industry representatives and schools in the U.S. and Europe have been successful in doing that.
They are keen to communicate that fashion is not just an old-fashioned industry, but a modern one with new technology and digitalization. “That is a constant struggle for these organizations to attract new skilled people. But that’s not a recent thing. In some cases, it’s gotten worse because there is a mismatch in certain economies between supply and demand, now that demand is going up so quickly.” Crietee said.
Looking at the situation from the production standpoint, he said how some countries like Vietnam are still dealing with factory closures caused by the coronavirus crisis. In addition, some factory and retail workers are concerned about potentially contracting the coronavirus in jobs where they can be exposed to hundreds of others on a daily basis. The IAF cited other deterrents such as the fashion industry’s reputation of being such a pollutant, individuals’ desires to start their own companies or a lack of awareness of the modernization that is taking place. To that last point, Crietee said new jobs are being created as a result and there is demand for data analysts. “In some ways, technology is changing quicker than the supply of people, who are trying to use it,” he said, surmising this is the case internationally whether that be in the U.S., the U.K., Germany or other countries.
“But there are regional differences in countries like Italy and France, where there is important production for high fashion where they need really skilled artisans to make very expensive shoes, handbags or $5,000 ski jackets. That’s always been a challenge to have enough young people get into those particular schools where they are taught those skills. With earlier generations, it was probably a tradition where your parents or grandparents were doing something and the logic was that you would do the same. That’s not there anymore.”
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