Retailers Scramble for Holiday Workers in Tight Labor Market

By Roy Maurer Oct 24, 2016
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Employers planning to hire hundreds of thousands of holiday-season workers this year are expanding their talent acquisition channels and raising wages to fill jobs from a shrinking talent pool.

Ninety percent of 1,000 employers in the retail, restaurant and hospitality industries surveyed by Snagajob, an hourly jobs marketplace, plan to hire seasonal workers for the holidays.

According to the National Retail Federation, retailers on their own are expected to hire between 640,000 and 690,000 seasonal workers through year-end.

Large retailers like Amazon, Target and Wal-Mart and the logistics companies that make online shopping a reality will account for the bulk of the expected job gains.

Amazon said it is creating 120,000 seasonal jobs this year, up from the 100,000 workers it hired for the holidays in 2015. Target announced it will add nearly 70,000 extra workers in its stores this year, and UPS will hire about 95,000 people to help meet shipping demands.

Labor market expert John Challenger of global outplacement consultancy Challenger, Gray & Christmas pointed out that the biggest increase in holiday hiring in recent years has been in transportation and warehousing, as more holiday shopping is done online.  

Retailers are beefing up their staffing in warehouses and fulfillment centers to meet the expected 20 percent to 30 percent surge in online spending during the holidays. Target said it would hire 7,500 people in its distribution and fulfillment centers for the holidays, up from about 1,000 from 2015. The U.S. Bureau of Labor Statistics found that transportation and warehousing employment increased by 200,500 workers in November and December last year. That's more than four times what it was a decade ago.

"We continue to move from brick-and-mortar toward click-and-order," Challenger said. "But even in the Internet era of holiday shopping, brick-and-mortar fulfillment facilities need seasonal workers."

Labor Market Challenges

Ashfaque Chowdhury, president of supply chain for XPO Logistics Inc., in Greensboro N.C., told The Wall Street Journal that the holiday season puts a lot of pressure on his company, which provides warehousing and transportation services to retailers. XPO employs about 24,000 year-round warehouse workers and expects to add 5,000 to 6,000 seasonal workers this year.

But the lowest unemployment rate in years and rising wages for the nation's lowest-paid workers mean a smaller pool of candidates is available. While the unemployment rate has decreased to 5 percent, the labor participation rate remains about the same at 62.9 percent. "This means that the supply of available workers is decreasing, while the competition among employers to attract workers is increasing," said Peter Harrison, CEO of Snagajob.

According to the Snagajob study, 82 percent of respondents experience challenges filling temporary holiday positions. The most common challenges cited are a lack of qualified workers (44 percent), a lack of available workers (34 percent) and competition from other employers (30 percent).

Brian Lemerise, president of Andover, Mass.-based Quiet Logistics, which fulfills orders for retailers, said he expects to hire an additional 750 workers this year during the holidays but is investing in warehouse automation to address future labor challenges.

Casting a Net for Holiday Workers

According to Snagajob, most employers plan to find workers using job boards and company careers sites (57 percent), followed by word-of-mouth (43 percent), social media (42 percent) and staffing firms (30 percent).

Employers are also expected to raise wages to attract holiday workers, according to ProLogistix, one of the largest logistics-staffing companies in the U.S. Pay is forecast to increase $1.50 to $3 an hour from the typical hourly rate of $10 to $12 during the fourth quarter to attract seasonal workers.

Lemerise said he expects to pay his holiday workers an additional 5 percent to 10 percent this year. Chowdhury expects wages at XPO to rise by 4 percent to 8 percent for its seasonal workforce, and UPS said it will pay higher wages.

The delivery company also redesigned its recruiting site to make it easier to use on mobile devices. "More than half of hourly jobs are now found this way, and 90 percent of job seekers want to find and apply this way" Harrison said.

Harrison also recommended recruiting through social media and explicitly using "holiday" and "seasonal" in job descriptions. "Our employers saw a 100 percent increase in pageviews and 300 percent increase in completed applications during the holiday season when they added those keywords to their job descriptions," he said.

Keith Ryu, co-founder and CEO of OnboardIQ, a San Francisco-based recruitment platform for the service sector, said the keys to seasonal hiring are speed and efficiency. He advised HR professionals to consider simplifying the application process to a maximum of 10 questions—collecting additional information later—and communicating with applicants via text for quicker responses.

He added that hiring automation software can save time by filtering out unqualified applicants, scheduling and rescheduling interviews, running background checks, and sending reminders. "Using hiring automation, employers can communicate en masse and screen applicants for specific times that they are available for shift work," he explained. "This can be a big help with scheduling large group interviews and to ensure that the midnight Christmas shift is covered."

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