Fifty years ago, Neil Armstrong placed the first human footsteps on the moon and Woodstock established the notion of the rock music festival. But there’s another reason to remember 1969: it was the last time that the country experienced a 3.6 percent unemployment rate. A decade ago it was hard to get jobs; now, it’s hard to find employees to fill them. That reflects a decade-long economic expansion that has seen consumers opening their wallets and spending. However, the reality of not being able to find new workers to handle all that good retail fortune is dark side of the boom.
A survey in March by the National Federation of Independent Business found that while 60 percent of small-business respondents said they were hiring or trying to hire, 54 percent found few or no qualified applicants for those open positions. More than one in five said difficulty in finding workers was the top problem facing their business, and nearly two in five said there were current job openings at their companies they could not fill.
MI Retail Has Some Insulation
Hiring challenges in MI retail are nowhere near the kind of DEFCON-5 level that industries such as hospitality and manufacturing have been experiencing. But they’re beginning to make themselves felt, often starting with salary expectations.
U.S. wage growth climbed 3.2 percent last July from a year ago. Kimberly Deverell, director of operations and educational development at the San Diego Music Studio, a Southern California rental and lessons company that also does some retail sales, says it’s becoming a hot topic among colleagues. “We have [prospective employees] coming in and expecting much higher starting pay levels than ever before,” she relates, noting that a shallower employment pool in general means younger workers are already finding higher starting salaries at other jobs they’ve already worked at. “We’ve never experienced that before. They’ll come in and say, ‘so-and-so offered me this much money so why can’t you?’”
Deverell believes it’s a combination of a very low-unemployment environment and a generational change, with Gen-Zers (a cohort she describes herself as part of) having different expectations of employment.
But, she adds, the next recession – which many economists predict is overdue and could take place before the 2020 elections – could rectify that. “We’ve been through two recessions so far,” she says of the 25-year-old company. “They change attitudes quickly.” Adam Levin, VP at Chuck’s Washington Music Center in the nation’s capital, says a shallower labor pool is making itself felt and is “a concern, but not a problem – yet,” noting that the most vulnerable positions are those other than front-facing sales staff. He’s counting on the passion factor to offset hiring challenges. “I’ve seen several people who have worked here who went on to work in other businesses as more jobs became available but who wanted to come back here, where they actually enjoyed coming to work every day, where you get paid for taking a guitar off the wall and playing it.”
Not every store is experiencing hiring challenges. Leslie Faltin, co-founder and self-described “ringmaster” at Instrumental Music Center’s two Tucson area locations, says their habit of hiring younger employees has kept the pipe flowing without interruption, including for the four to six temporary hires they make in late summer in anticipation of rentals for school bands starting up for the year. A combination of youth – many hires are just out of high school though some temp workers have been retirees – and musically tinged altruism have made for a ready pool of new hires when needed.
“It’s not a high-paying position in MI retail, but a lot of our employees like that they get to be the ones who introduce some customers to their first instruments,” she says. “And like a lot of young musicians, it’s not unusual to see four or five of them sharing a house or an apartment to keep the cost of living down. But I can see where it could be a problem in other markets where the cost of living is higher and there are more higher-paying employment opportunities.”
Retention
If hiring new employees in some geographical markets is less of a problem than in some others, keeping the ones a store has may be a more universal concern. “Retention is the big one everywhere,” says Jimmy Edwards, president of the seven-store Marshall Music chain based in Lansing, Michigan. “Because the job market is so good right now and there are so many other opportunities compared to just a few years ago, keeping good employees has become the focus now.”
Edwards says he’s had to raise wages slightly, but as importantly, he says he’s trying to better communicate what employees can expect in terms of future upward movement at the company, providing some clarity about how employees can progress to next levels of responsibility and compensation. That extends to the stores’ back offices, as well, where positions in IT and accounting can be even more volatile because of demand for those skills.
“There are other opportunities out there for them and they’re hearing about them,” he says of employees in general at the moment. “If they begin to feel that their financial goals or the work environment isn’t working for them, then they will move on, because they feel confident that they can get another job elsewhere.”
Edwards says that MI retail has a particular allure for a certain type of person, including musicians and educators, and that that appeal is a bit of a magic bullet that can insulate this sector from the pressures of having to find new hires. But, he cautions, “We cannot take that for granted anymore.” Kimberly Deverall at San Diego Music Studio says high employee standards, such as her company’s requirement that full-time employees have a college-level degree in music or be in the process of earning one, makes hiring more challenging, but that those accomplishments also tend to be found in employees who will stick around longer. “We also strive to create a great culture, such as letting workers have time for their gigs,” she says. “Musicians need flexibility, and who should know that better than music stores?” Along, of course, with paid time off, healthcare and a 401(k) plan, which she says the company offers for full-time employees.
The Data is Downbeat
It doesn’t help that like many small businesses, MI retail is limited in the salaries it can afford to pay. Wage data from Glassdoor.com earlier this year found that, although pay growth at the smallest companies is accelerating, their median base wage still trails. For companies with 50 or fewer workers – MI retail’s usual category – the median is $47,864, and for those with between 51 and 100 employees, it is $49,653. By comparison, median base pay at employers with more than 5,000 workers is $53,225.
“I’ve been looking more at why people stay than why they’re leaving. People find a way to their passions. We need to make that way as clear as possible.” — Washington Music’s Adam Levin
Furthermore, younger workers tend to change jobs more often. Overall, the average American’s career includes 15 job changes, according to a 2016 LinkedIn report. A recent Gallup report found that 21 percent of Millennials say they’ve changed jobs within the past year, which is more than three times the number of non-Millennials who report the same. Gen-Z looks to be even more peripatetic, career-wise: college job-finder Ripplematch reported this year that 44.5 percent of graduates said they planned at staying one to two years at their current jobs, and 37 percent of respondents said they envisioned themselves staying with their current company for three to four years. Only 14 percent expected to stay long than five years. In other words, the notion of changing jobs often is already largely baked into the attitudes about employment in the generation that will soon make up the largest sector of entry-level workers – 61 million Americans, a number that’s already larger than Generation X and two-thirds the size of the Boomers.
Accentuate the Positive
Retail employment dropped to a three-year low for six straight months this year, Labor Department figures showed, but that should not be the basis of a strategy at a time when the labor market is this tight. What MI retail has going for it is its ability to put musicians, who make up the majority of its sales labor pool, into what many of them consider dream jobs early enough in their post-school careers and before they begin to start families so that lower salaries aren’t a deterrence. And a percentage of them will stay on, learning management and in some cases crafts such as instrument repair.
That’s what Washington Music’s Levin is counting on: trying to find ways to communicate the full value of working in a music store to a select group of people. “I’ve been looking more at why people stay than why they’re leaving – that’s a shift I’ve had to make,” he says. “Salaries are part of it, but it’s really about making sure the vibe is good and that everyone is part of that vibe. People find a way to their passions. We need to make that way as clear as possible.”
