Holiday hiring numbers help gauge the recovery

Full article: 

Holiday Hiring Numbers Help Guage the Recovery_Print.pdf

Now that Black Friday and Cyber Monday have passed, we are fully into the holiday shopping season. Once again, we ask ourselves that time-honored question: Why didn't I get my shopping done earlier this year?

There's also another big question, just as the holiday lights and music began to infiltrate our neighborhoods and retailers: How big will this year's holiday retail season be?

Historically, the holiday season and associated shopping have been important for retailers, providing them with the final word on the year's business.

More recently, the holiday shopping season has also been used more broadly as a gauge of consumer sentiment for the coming year.

Frequently we think of spending by consumers as the only economic measure. Yet another important measure of the impact of the holiday retail season is local employment. Certainly, the two are closely related. If retailers anticipate a lot of holiday shoppers, they are likely to hire more seasonal workers.

Stronger holiday spending forecasts point toward a greater holiday hiring boost this year over last.

In the Cincinnati area, retail employment makes up about 3 percent of total employment. From 2000 through 2007, the holiday season - which is considered to include November and December - typically experienced an increase in employment in general merchandise, clothing and accessory stores by about 10 percent to 15 percent compared with the first 10 months of the year. This end-of-year increase in retail employment is the holiday hiring boost.

Since 2008, however, the size of this increase has been substantially smaller. In both 2008 and 2009, the retail sector experienced just short of a 7 percent increase in employment during the holiday season - about half the historical amount. This has been the smallest holiday hiring boost since the recession of 1990-91.

So what will this year hold? The data suggest that the region's retailers would need to see at least an 11 percent hiring boost during this year's holiday shopping season to return to the trend of the last 20 years. Such a boost would almost bring annual retail employment back to pre-recession levels.

It would also be the largest holiday hiring boost in the area since 2003.

How likely is it that we'll see a substantial increase in holiday hiring? Probably not very, particularly given that many households have taken the recession as an opportunity to pare down their debt and save more in this period of uncertainty, thus muting retailers' expectations for a dramatic surge in holiday spending.

After 1990 and '91, which both saw holiday hiring increases of about 7 percent to 8 percent, holiday retail employment experienced almost a 12 percent increase. It's more likely that this year's holiday hiring increase will not exceed 10 percent.

Still, while a 10 percent increase may not be enough to recover entirely from the last two years in one fell swoop, even something just short of that increase would move us in the right direction. A slightly larger increase in holiday hiring than the last two years might indicate that retailers and consumers are beginning to feel a little more on solid footing, which would bode well for the coming year.

We won't know until we see the actual numbers, but hopefully we will usher in the New Year on a more optimistic economic note.

Regardless of the size of the boost, once again the holiday shopping season will bring out all of us procrastinating purchasers as we search for those perfect gifts, a little joy and a parking place.

Jennifer Pitzer is a research associate at the University of Cincinnati's Economics Center.