Competition for workers grows, putting the onus on retailers to keep employees happy

The news: Private sector employers added 475,000 jobs in February, including 170,000 leisure and hospitality jobs (where retail workers are grouped), per ADP’s monthly jobs count. Those strong numbers are making competition for retail workers increasingly tough and leading them to feel empowered.

  • To help attract and retain workers, retailers including Target, Macy’s, and Costco are boosting store and supply-chain workers’ pay.

More on this: While many large retailers are increasing wages, those increased costs haven’t hurt their bottom lines, per The Wall Street Journal.

  • Target announced it will increase its starting hourly wage range for store and supply-chain workers to $15 to $24, per a company press release.
  • Costco plans to raise its starting hourly wage for store workers to $17.50 this month. For some employees, it could be as high as $28.50.
  • Walmart said last September it would raise workers’ pay to at least $12 per hour, and its starting wages for store employees range between $12 and $26, with supply-chain roles starting at up to $28 an hour, a spokeswoman told The Wall Street Journal.
  • Amazon’s minimum wage is $15 an hour, with average hourly wages at around $18. 

Profits for these companies are also increasing, supported by strong sales growth and efforts to control costs in other parts of their operations, per The Wall Street Journal.

Analyst take: “Store associates are retailers’ front line,” said Suzy Davidkhanian, eMarketer principal analyst at Insider Intelligence. “They’re critical to the brand experience. Experienced, knowledgeable employees are a differentiator. We know that employees attribute a lot of value to pay and that unhappy employees are more likely to leave. Turnover is bad for the customer experience and expensive for retailers."

Unionization fights: The tight labor market is also empowering workers to seek change from their employers. 

  • Employees seeking to unionize a Seattle Amazon Fresh grocery have asked management for higher pay, a more flexible attendance policy, longer breaks, and other benefits, per Insider. The push comes at the same time that three US Amazon warehouses are in the midst of unionization campaigns. 
  • A labor group organizing workers at Starbucks has filed 20 complaints over the past week accusing the company of workers’ rights violations that range from a threat to shut down all stores in the Buffalo, New York, market to discriminatory enforcement of policies, per Bloomberg. 

The big takeaway: The current labor market is leading many retailers to recognize that boosting store and supply-chain workers’ pay can be good for business. It ensures their stores are staffed with well-trained employees, which can help keep shoppers satisfied despite higher costs due to inflation. 

  • Moreover, there’s a significant cost to unhappy employees.