Study: Full-time retail workers earn above-average pay

Lauren Abdel-Razzaq
The Detroit News

A new industry-sponsored study reports that retail workers earn above-average pay if temporary workers, including those who get hired in for the holiday season, are excluded from calculations.

According to the study, released this week by the National Retail Federation, stable retail workers 25 to 54 years old working full-time for at least three consecutive months, make on average $38,376 a year, about 1 percent higher than full-time workers in non-retail jobs. This supports the association’s claims that retail jobs aren’t just for young first-time workers, and that it is possible to make a decent living in a long-term retail career. .

“The data shows very clearly what is the truth, that retail offers fulfilling careers for millions across the country and provides high paying jobs,” Matthew Shay, CEO of the Washington, D.C.-based trade group, said during a conference call with the media Wednesday. “That bolsters our position that retail jobs, in addition to being the most numerous and most significant jobs in our economy, are also very good jobs.”

The National Retail Federation released the data at the same time it is arguing against a blanket minimum wage raise for retail workers. The federation maintains mandatory raises in the minimum wage could force small businesses to close.

The study used data from the U.S. Census Bureau and the U.S. Bureau of Labor and Statistics and was compiled for the federation by University of Georgia economist Jeffery Dorfman. Because 32 percent of retail industry workers are temporary hires and 31 percent are part-timers, Dorfman removed those employees from the equation in order to get a cross-industry comparison that would “compare apples to apples.”

“Contrary to what so many people believe, careers in the retail industry are actually very financially rewarding,’ said Dorfman during the conference call. “The research clearly shows that employees who decide to make full-time careers in retail can rise rapidly to high paid management positions.”

Ken Dalto, a Farmington Hills-based management consultant and local retail analyst, said the retail industry is probably more likely comprised of 35 to 45 percent part-time workers and small businesses with less than 50 employees that account for around 75 percent of the industry. But even with that, he says the study makes a valid point that raising the minimum wage across the board could be harmful to employers from a purely economic standpoint.

“From the point of view of the worker it is a good thing,” he said. “But from the point of view of the employer, it definitely is a setback.”

Earlier this year, Gov. Rick Snyder hiked the minimum wage, raising it 25 percent over the next four years from $7.40 in the beginning of this year to $9.25 by 2018. It then will automatically rise annually based on inflation.

Snyder’s decision added Michigan to a list of nine other states that approved mandatory wage hikes this year, and the state’s rate is now the ninth highest in the country. The first pay hike went into effect Sept. 1 and was the first minimum wage hike in seven years.

At the same time, President Barack Obama has backed increasing the federal minimum wage to $10.10 an hour, but the proposal has gotten no traction in Congress where the Democratic-controlled Senate and Republican-led House disagree on the issue.

The problem, said Dalto, is that employers will have to make up for higher wage mandates, just like they have had to make up for universal health care under the Affordable Care Act. That includes laying off workers, hiring freezes or reducing work schedules to under 8 hours a day.

“It’s the same phenomenon. Both Obamacare and minimum wage increases tend to be negative on small mom-and-pops and the restaurant chains,” said Dalto. “They are paying more and many of them are very tightly wound. They are cash strapped all the time.”

Jack Kleinhenz, chief economist for the National Retail Federation, said the association believes each business should determine what to pay their workers.

“Each business is looking at different sets of circumstances.,” said Kleinhenz. “Now is not the right time to issue a mandate for increase in minimum wage because the economy is stagnant.”

As the economy improves and workers have options, it could be in the best interest for businesses to reevaluate employee compensation even without having a minimum wage raise mandate, said David Ham, program director for Ann Arbor-based CSI Group USA.

“I think it’s very important that retailers, to be successful, can offer a competitive wage that is going to draw the type of associate they need,” said Ham. “In a good economy, where people can go find other jobs, there’s a risk to retailers who aren’t stepping up.”

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