Worker shortage hurting Bay Area retail business
With brick-and-mortar stores closing at an alarming pace, you’d think there would be a glut of workers with retail skills pounding the pavement. But a national surplus of such workers has almost dissipated since the beginning of this year, and a shortage has developed in some markets, most notably the Bay Area, according to a LinkedIn report released Tuesday.
“Hiring in the retail industry may only be up 0.5 percent from last August, but employer demand for retail workers is surging, belying the ‘retail apocalypse’ narrative that’s dominated in recent years,” the report said.
The national surplus of people with retail sales skills dropped to 11,632 in August from 115,155 people in January. “This represents one of the highest changes in demand across all the skills we track,” the report said.
New York City swung from a surplus of 2,692 people with retail sales skills in January to a shortage of 6,168 people. The Bay Area’s shortage grew from 4,614 in January to 10,429 people in August.
“There’s a running joke: If you have a Social Security number that’s valid and a heartbeat, we will hire you,” said Maryo Mogannam, who owns and runs four pack-and-ship stores
in San Francisco called The Postal Chase.
The LinkedIn study focused on skills, not industries. To gauge supply, it looks at the skills that LinkedIn members have listed on their professional profiles. To measure demand, it looks at the skills desired by employers posting help-wanted ads on LinkedIn, and the skills listed by people who were hired in the past 12 months. In addition to traditional retailers, companies such as Tesla and Compass, a real estate brokerage, are hiring people with retail skills in the Bay Area, said Jacqueline Barrett, LinkedIn’s lead economic researcher.
Despite the impending closures of longtime Bay Area retailers such as Gump’s and Orchard Supply Hardware, local merchants say hiring has become a major challenge, mainly because they can’t afford to hire people who can afford to live within reasonable commuting distance, much less entice people to move here from outside the Bay Area.
In San Francisco and San Mateo counties combined, the median hourly pay in the first quarter was $14.28 for retail salespeople and $20.96 for first-line supervisors of retail sales workers, according to the California Employment Development Department. The median for all occupations was $28.17 per hour.
At Pier 39, the tourist attraction filled with stores and restaurants, “probably the biggest complaint I get from my tenants is that it’s just impossible to find employees,” said Sina von Reitzenstein, the pier’s vice president for leasing.
After five years at Pier 39, Terry and Craig Learner closed their Hot Licks store — on Labor Day, ironically — which sold hot sauce and spicy snacks, because of a labor shortage.
Like other San Francisco retailers, Learner complained of getting ghosted by new or potential employees. “I paid for advertising through Craigslist and Indeed,” she said. Applicants would either not show up for an interview; or they would show up, interview well and accept a job but not show up the first day; or they would show up the first day but then say they had to go on vacation and never return, she said.
To attract and retain workers, Learner said she offered “well above” San Francisco’s $15-an-hour minimum wage (she wouldn’t say how much), flexible schedules and, if they made it past probation, “we’d pay for their transportation.” Some employees wouldn’t work at night (Pier 39 closes at 10 p.m. during the summer) because of the increased vagrancy they encountered getting to mass transit.
The Learners don’t have these problems at their other two stores, in San Diego and Long Beach. “We really loved being in San Francisco,” and Pier 39 “was phenomenal to work with,” Terry Learner said. But “we did the cost analysis and said if we took the same store and moved it to Los Angeles, we would probably do better with less hassle.”
Mogannam said that two or three years ago, “if an employee gave me notice or left, I had a replacement within a week. Now I’m putting out multiple ads on multiple platforms. I’m getting 30 or 40 people replying, but many are just doing it to meet their unemployment requirement.
“If I get 15 that are responsive, I’m happy if five show up (for an interview); I’m delighted if one qualifies (for the job) and I’m ecstatic if one works out and lasts for 90 days.”
He said that in the past, if a retail worker left the city, another would move in — but now, retail and service workers are being displaced “by a tech worker or higher-end individual.”
He’s paying “some high school and college kids with zero experience $16 an hour, with the possibility of making $18 within 90 days if they meet certain benchmarks.” To pay them more, he’s had to raise prices but “my clientele should be able to afford it.”
Dan Kowalski, chief operating officer of the Shell Cellar at Pier 39, said, “We used to only hire when we had an open position; now we hire and interview all year long. If someone has the talent, we hire whether we need them or not, just so they can be part of our team.”
During the busy summer months, he has to compete with a growing number of big tech companies offering internships.
His store has started to pay employees more, but, he said, “I don’t have Twitter’s budget to work with. We are learning how to run a much leaner company.” For example, he’s moved people from a nearby warehouse to the store “so we have more face time with customers.”
He said he didn’t know how a huge store like Gump’s could employ enough people to provide the level of service its customers expected.
In San Francisco, grab-andrun theft and other security concerns also discourage some people from working in streetlevel stores, said Vas Kiniris of the San Francisco Council of District Merchants Associations.
Brick-and-mortar stores “had a really rough year in 2017 — there were a lot of bankruptcies. In 2018, things started to turn around,” said Andrew Flowers, an economist with job site Indeed.
Nationwide, 15.913 million people were employed by retail establishments in August, up from 15.85 million last August, according to the Bureau of Labor Statistics. “Year over year, that’s not much growth. It’s improving, but still not fully recovered given the state of the economy,” said Flowers.
If you take out sub-industries such as gas stations that don’t compete with Internet retailers, employment was flat to down slightly.
Looking ahead to the crucial holiday season, Indeed reviewed its help-wanted listings and found that the share of job postings for seasonal or holiday workers is down about 25 percent from this time last year and 20 percent below 2016. Flowers is not sure why.
“It could be that retail overall is slowing down, and thus employers are posting fewer jobs. Or it could be a shift to retailers investing in e-commerce operations and less so in brick-andmortar jobs.”
Or maybe retailers are just making do with fewer people.