Scheduling hourly workers has always been a balancing act. Now it's being done on a very high wire.
On one side, workers want more hours, and more predictable ones. On the other, demands for labor are shifting, in both the short and long term, requiring extra flexibility. Employers are being pressured to give workers more stable hours—but not too many of them.
When it comes to hourly labor, trends in both overall U.S. employment and retailing in particular would seem to favor workers. The national unemployment rate has been dropping more or less steadily since 2009 and recently dipped below 5 percent.
"With the changing economy, there's an increase in the demand for talented hourly workers," says the 2016 "State of the Hourly Worker" report from Snagajob, an online employment site. "But the low unemployment rate and a steadily shrinking labor participation rate is decreasing the supply of available workers."
One consequence of this decreased supply is increased turnover, as workers have their choice of jobs and can quickly find another if they become disenchanted. Craig Rowley, global practice leader for retail at the Hay Group unit of labor consultancy Korn Ferry, says that turnover in retail has been creeping up since the recession. The last Hay Group annual survey showed a 67 percent turnover rate, up from 50 percent just four years ago. This is still lower than the pre-recession rate of 90 percent, but he expects it to keep going up.
"Retention is increasingly a concern for retail," Rowley says. "Certainly clients are telling us that hiring and retaining employees is an increasing issue, particularly in more robust markets."
Another consequence of increased labor demand, as might be expected, is increased pay—at least, for some. Walmart raised all hourly wages to $10 in February, and Target followed suit soon after, as did TJX Companies. Convenience-store chains Wawa and Sheetz raised starting wages to $10 early this year. Numerous states and municipalities also are imposing higher hourly minimums, including New York ($15 for New York City by 2021); California ($15 by 2022) and Washington, D.C. ($15 by 2020).
But workers aren't totally in the driver's seat. Rowley believes that hourly wage increases are more of a company-by-company phenomenon than an overall trend.
"Most of the organizations are [increasing wages] as a business strategy issue," he says. "There's no market push today to pay more. Everyone's kind of waiting to see what will happen with the minimum wage." The survey on which the Snagajob report is based seems to bear that out: 58 percent of respondents make $10 or less per hour, with 41 percent making $9 or less. The online survey of more than 1,000 participants was conducted last February.
As for retention, one of the biggest reasons workers switch jobs is frustration over inadequate and unpredictable hours. Just under half of the respondents in the Snagajob poll expected to stay at their next job for three years. And getting enough hours was named as a top factor in considering a job by 65.4 percent of respondents.
They also want predictability. One of the biggest complaints among hourly workers is the lack of stability in their schedules, due to so-called just-in-time (JIT) scheduling. When grocery workers in Southern California came close to a strike this summer, one of their grievances was not knowing when they would work until shortly before their shifts started.
In a 2014 poll of 1,000 working adults taken by Public Policy Polling and cited by the Economic Policy Institute, 29 percent of retail/wholesale trade workers characterized their work schedule as "irregular." Especially detested is the practice of "on-call scheduling," whereby workers must remain available for blocks of time without knowing how many hours they'll get—if they get any at all.
"Certainly clients are telling us that hiring and retaining employees is an increasing issue, particularly in more robust markets."
The rise in both JIT scheduling and on-call scheduling came about because as the recession eased, retailers found themselves under increased pressure to improve customer service, says Steven Kramer, CEO of WorkJam, a supplier of labor management software. The rise of e-commerce contributed to this demand.
"When the recession was over, the interesting thing that happened was that retailers kind of started to say, ‘OK, now I really need to focus on customer experience, so I'm going to put a greeter at the front door, and I'm going to add a couple of roles on my floor to augment the customer experience,'" Kramer says. Tasked with improving customer service with more labor, a some retailers increased their pool of JIT part-time workers.
Contributing to this trend is the Affordable Care Act. The ACA requires companies with 50 or more employees to make health insurance available to 95 percent of them, or pay a penalty. Although the ACA was signed into law in 2010, that requirement was put off, but it finally went into effect for the last group of eligible employers (those with 50 to 99 full-time employees) at the beginning of this year. It defines full-time employees as those who work 30 or more hours a week (or 120 a month), which has the unintended consequence of incentivizing employers to keep hours under the 30-a-week threshold.
"That creates extra complexity, because those businesses now end up needing more workers to fill the same number of hours," says Peter Harrison, CEO of Snagajob. This will put upward pressure on wages for part-timers, he believes: "We see a willingness for them to pay a little bit more, if they have to, for people who will work below that threshold."
However much it may suit employers, in terms of both their in-store requirements and labor regulations, JIT scheduling is generating a significant backlash.
"You have a single mother that is looking for 40 hours a week, and she has total unpredictability in when she's going to work because of these on-demand-type scheduling processes," Kramer says. "Now there's pressure from these employees, as well as from the government, to kind of go the opposite way."
The government pressure, to date, has been relatively mild. It has mostly come in the form of laws or ordinances that protect workers from employer retaliation if they request a more stable schedule. These have been proposed in nine states and at the federal level, but to date, San Francisco and Vermont are the only jurisdictions with such measures actually on the books. Attorneys general in New York and other states, however, have looked into whether existing regulations in their states prohibit on-call scheduling; in New York, several retailers have agreed not to do it.
"You have a single mother that is looking for 40 hours a week, and she has total unpredictability in when she's going to work because of these on-demand-type scheduling processes."
But laws or no laws, the desire of hourly workers for more, and more stable, hours may finally outweigh the advantage for employers of having a large pool of part-time workers. If workers don't get the hours they want, they're more liable to leave, and turnover can be costly.
The costs of turnover vary, but in retail, they're generally higher for positions that require the most customer interaction, Rowley says.
"If all I'm doing is stocking shelves all day, that's a relatively straightforward task. I can teach it to a person in a couple of weeks, and I can use a model to make them very efficient. So I can afford more turnover," he says. "On the flipside, I have retailers where customer interaction is very important, they have highly trained salespeople. Those jobs are harder to fill, and that's where you want to try to moderate or manage turnover." The biggest expenses for such positions are in training time, lack of productivity while employees are learning, and early errors that affect customer service.