Will labor costs and consumer confidence crash the holiday hiring season?

Posted on Sep 18, 2023 in Nuts & Bolts

As the 2023 holiday season kicks off, the labor market is starting to cool and employers are hiring at a slower clip. As labor costs and interest rates rise, seasonal employers may rein in their typical hiring sprees, as both consumers and employers feel the crunch, according to one workplace authority.

“With inflation slowing, companies, particularly Retailers, won’t be able to pass increased labor costs to the consumer as easily. This could lead to more cuts, rather than more added positions, as evidenced by the increase in job cuts in this sector,” said Andrew Challenger, workplace and labor expert and Senior Vice President of global outplacement and executive and business coaching firm Challenger, Gray & Christmas, Inc.

Retailers have announced 55,755 job cuts through August, according to the latest Challenger Report. This is up 524% from the 8,940 job cuts announced in the sector through August 2022.

Due to the current environment, Challenger predicts Retailers will add 410,000 seasonal positions, the lowest number of jobs added in the final quarter since 2008, according to an analysis of non-seasonally adjusted data from the Bureau of Labor Statistics (BLS) by Challenger.

The 2022 holiday hiring season saw Retailers add 509,300 jobs, revised down from 519,400, according to the BLS. That is down 27% from the 701,400 jobs added during the holiday season in 2021, and the lowest since Retailers added 495,800 seasonal positions in 2009.

Retail employment has surpassed pre-pandemic levels, but is lower than 2018, when 15,713,500 people were employed in the sector in August. This year, Retail employment in August is 15,530,000, according to preliminary non-seasonally adjusted data from the BLS. Peak employment for the sector in August occurred in 2016, when 15,809,900 workers were employed. The highest employment in Retail recorded in a single month occurred in December 2016, when 16,338,300 workers were employed.

Meanwhile, Transportation and Warehousing, which saw its highest employment on record last December with 7,049,500 has fewer workers this August than in the same month in 2022. In August, the BLS reported 6,556,200 workers, down 24,000 jobs from August 2022.

So far this season, seasonal hiring announcements are slow to occur. US-based companies have announced just 38,000 seasonal hiring plans so far this year, according to Challenger tracking. By this point in 2022, employers had announced 258,201 seasonal hiring plans, up 36% from the 190,000 seasonal hiring plans announced by the same time in 2021 and down from 301,700 hiring plans companies announced at this point in 2020.

1-800-FLOWERS.COM will hire 8,000 workers for the 2023 holiday season, the same number as last year. Bed, Bath & Beyond plans to hire 30,000 for the holiday season. Kroger announced it would hire “thousands,” but did not specify a number. Job posting sites have ads for seasonal employment for companies such as Crate & Barrel, Macy’s and UPS, but no other employers have announced major hiring plans as they have in past years. Notably, UPS not announced seasonal hiring plans after negotiations with the union led to higher wages for current members and avoided a strike. The transportation company has announced 100,000 new hires for the holidays in each of the last three years.

“Seasonal employers have a few issues to grapple with in the coming months. One is the cost of labor limiting desire to add workers. Another is whether consumers continue to spend at the same clip. Another is one that has been fairly constant since the pandemic: can they attract workers?” said Challenger.