The Silent Crisis of Retail Employment
Derek Thompson
Brick-and-mortar retail is having a meltdown, and economists are starting to see the effects in the job market.
Overall retail employment has fallen every month this year. Department stores, including Macy’s and JC Penney, have shed nearly 100,000 jobs since October—more than the total number of coal miners or steel workers currently employed in the U.S. Even America’s richest areas are getting hit: Employment in New York City clothing stores has fallen three years in a row, the longest period of decline on record, going back to the early 1990s.
When some industries lose workers, they win the consolation prize of empty political promises to turn back time. During the presidential campaign, Donald Trump and Hillary Clinton went up and down Appalachia—and far beyond—to lament the job losses suffered by manufacturers and miners. The loss of these jobs has been devastating to many cities and towns. But department stores have lost 18 times more workers than coal mining since 2001.
So, how has the retail bloodletting been so much quieter than the decline in mining and manufacturing? There are several plausible explanations. First, mining and manufacturing jobs are geographically concentrated. Sixty percent of coal-mining jobs are in just four states: West Virginia, Kentucky, Pennsylvania, and Wyoming. Retail is spread more evenly across the country, so there are “mining towns,” which politicians can visit and photographers can capture and where the pain runs especially deep, in a way there are not “mall towns.” Second, as Slate Chief Political Correspondent Jamelle Bouie tweeted, the demographics of a job can determine its political salience. Coal mining is still 95 percent white and 95 percent male. Department store workers are 40 percent minority and just 40 percent male. The emphasis on work that is white, male, and burly may represent an implicit bias against the working class of the modern service economy, which is more diverse and female. Third, mining and manufacturing jobs feed into a national nostalgia for the mid-century economy, with its unionized workforce, economic growth, and high pay for men without much education.
But the decline of clothing-store jobs has something in common with the demise of manufacturing and mining jobs, too. They are both victims of the familiar forces of globalization and technology, which have conspired to make clothes cheaper and accessible online. Both forces can make the country richer while specific areas suffer. For example, the loss of Ohio manufacturing jobs or an exurban department store can have severe local costs—like high poverty in an eastern Ohio steel town, or the shuttering of a downtown mall—while elsewhere the country flourishes, with rising industrial productivity and better access to cheaper clothes.
Altogether, the destruction of jobs in retail, mining, and manufacturing raises a thorny question: Is it really so bad when one industry’s jobs go away, if the country as a whole is getting richer and the number of jobs is still growing?
Indeed, as retail has moved online, some economists argue that e-commerce has created more—and, perhaps, better paying—work. The economist Michael Mandel estimates that since the Great Recession began, the e-commerce sector has created 355,000 new jobs, compared to about 50,000 total jobs lost in physical retail stores. Much of that growth has come from large fulfillment centers in warehouses. Warehousing is not used exclusively for e-commerce, but the change in warehousing jobs is highly correlated with Amazon’s job growth in the state; since 2009, warehousing employment has soared by almost 50 percent. Fulfillment centers pay 26 percent better than general retail jobs, and warehouse wages are currently growing twice as fast as the national average.
Politicians are often nostalgia merchants, selling the irreplaceable virtues of whatever cultural or economic norm is in its twilight. In the 20th century, they mourned the wilting of the agricultural industry, just as they currently lament the death of factories. But in an economy that will become increasingly digitized, automated, and otherwise inflected with new technologies like self-driving cars and artificial intelligence, Americans can’t get too precious about any particular job or industry.
Instead, lawmakers should be focused on reducing human suffering as some job sectors shrink or disappear altogether. That might include universal health care that isn’t tied to any one specific company and moving vouchers to help workers manage the transition to a new area for work. Overall it requires an approach that is the opposite of then-candidate Trump’s message on the campaign: Not “how can we rebuild the economy of about 40 years ago and freeze it in carbonite?” but rather “what sort of federal policies are best for an economy that might be embarking on a period of industrial churn?”
The former question probably makes for better politics. It is easier to build a coalition through demonization, the establishment of an evil them—like, Democrats and their environmental regulations—to crystallize a politically motivated us—like, West Virginia mining towns. It is much harder to say the truth: Technology and trade make America richer as a country, but the winnings are distributed unevenly, and it’s the responsibility of government to improve the distribution without making everybody poorer in the process.
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