Every month the Bureau of Labor Statistics releases employment data widely used as an indicator of health for industries, including retail, that drive the U.S. economy. The problem is the data does not accurately reflect the scale of retail employment, or the direction of its growth.
It doesn’t matter if a retail company signs your paycheck — when it comes to the BLS, it’s where you work, not who you work for.
As far as the BLS is concerned, if you work for a retailer but don’t work in a building where the retailing of goods is the main activity, you don’t count as a retail employee. That means retail CEOs who work in headquarters buildings are not captured as retail employees; neither are accountants, marketers, HR, IT or any other employees who work in a building that isn’t a store. If you work in warehousing, transportation, a call center or headquarters, you’re not categorized as a retail employee. It doesn’t matter if a retail company signs your paycheck — when it comes to the BLS, it’s where you work, not who you work for.
So why does this matter? The retail industry is evolving rapidly due to shifting consumer preferences and new technologies, and successful retailers are adapting for the omnichannel future. Retailers across the country are investing significant capital to build out their ecommerce platforms and fulfillment capabilities. They’re building warehouses and hiring a broad array of employees who aren’t store-based. As a result, some of the fastest growing job categories in retail are mis-classified into other industries such as IT, management, transportation and warehousing.
Customers shopping on mobile can buy a product from a retailer and not a single person involved in the process would be considered a retail employee using the BLS definition. From the marketers who send an ad, to the IT people who design the ecommerce interface, all the way through to the warehouse employees who fulfill the order, BLS data does not paint an accurate picture of the modern, multichannel retail industry — or its employment.
Take a look at any typical modern retail transaction to see how retail reporting is out of sync with today’s retail reality.
Retail is one of the best performing industries in America. In 2018, retail sales increased by over 4 percent — the fastest growth in the past three years and the second strongest year of growth in the past decade. Consumers are spending, and many retailers are reaping the rewards. The Dow Jones U.S. Retail Index outperformed the Dow Jones Industrial Average in 2018.
But that’s not the picture BLS employment data portrays. According to those numbers, retail employment growth is roughly flat over the past three years. That’s not surprising given that the BLS excludes some 4 million retail jobs in its monthly data release, by our estimates. That’s 20 percent of the retail workforce that doesn’t show up in the monthly jobs report. To worry about the health of retail because store-based jobs decline by a few thousand in any given month when there are 4 million retail employees left out of the mix just doesn’t make sense.
It’s time to start looking at different metrics to measure retail’s success. The next time you see BLS retail employment data, keep in mind it is an incomplete and inaccurate measure of the overall health of the retail industry.