Today, women make up nearly half of America’s workforce, and there is little question that their success in the economy is critical to the nation’s prosperity. Yet every day across America, millions of women go to work in low paying jobs that fail to move their families out of poverty.
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One such low-paid position is the most common occupation in America today: retail salesperson. The typical woman working as a salesperson earns just $10.58 an hour: a wage that keeps a family of three near poverty, even if the employee is able to secure enough hours for full-time work. American women disproportionately hold the retail industry’s lowest-paid positions. Jobs that could be a source of stability to families and growth for the national economy too often involve not only low pay but erratic schedules, a lack of sufficient work hours, and the scarcity of basic benefits like paid sick days—making hourly retail jobs precarious positions holding back not just women but their families and our nation as a whole.
Retail is far from the only low-paying sector of the American economy. Yet because it is one of the top industries employing women, and one projected to add a substantial number of new jobs over the coming decade, the choices the nation’s major retailers make about employment will play a crucial role in determining the nation’s economic future.
This study looks at the retail industry as it is today for the 7.2 million American women employed in its ranks, as it will look in 2022 if present trends continue, and as it could be if the nation’s largest retailers—companies employing at least 1,000 workers—raised wages and improved employee schedules.
Building on our previous study, “Retail’s Hidden Potential” we provide an updated assessment of establishing a new wage floor for the lowest-paid retail workers equivalent to $25,000 per year for a full-time, year-round retail worker at retail companies employing at least 1,000 workers. We explore the implications of this wage hike for female retail workers in particular. We find that for the typical woman in retail who earns less than this threshold, the new floor would mean a 27 percent pay raise. Including both the direct effects of the wage raise and spillover effects, the new floor will impact more than 3.2 million female retail workers and their families in addition to 2.5 million male retail workers and their families. For a full description of the study methodology, see the appendices.
The lack of sufficient work hours and predictable, stable schedules for hourly retail workers is another obstacle for women trying to work their way out poverty. This study considers the rise of just-in-time scheduling in retail industry, a growing practice in which retail employers use scheduling software and measures of consumer demand to match workers’ hours to the projected need for labor on a daily or even hourly basis. As a result, workers often do not know how many hours they will work in a given week or month: their incomes fluctuate and workers cannot budget effectively. Ever-changing schedules make it more difficult for working mothers to plan child care arrangements, for workers to get education or training that could help them get a better job, and for employees trying to supplement their incomes with a second job to establish a compatible schedule. In effect, unstable and unpredictable schedules deprive women in retail of both immediate income and opportunities to rise up.
The retail industry today faces a crucial choice. As the industry grows in the coming years, will its largest companies shift toward wages and schedules that allow hard-working women in retail to rise out poverty, boost the economy, and promote broad societal benefits such as improved public health and opportunity for the next generation? Or will they continue on the present course, including the 28-cent pay gap in sales and related occupations, and billions of dollars in taxpayers subsidies to large and profitable companies that don’t pay their employees enough to live on? This is retail’s choice.
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Wages that raise families out of poverty, or push them into it?
- Today: 1.3 million women working in the retail industry live in or near poverty (defined as within 150 percent of the poverty line).
- If present trends continue: by 2022, more than 100,000 additional women will be added to ranks of retail’s working poor and near poor—meaning that nearly 1.4 million women working in retail and the nearly 2.5 million family members they help to support will be living in or near poverty in 2022.
- If the nation’s largest retailers raised wages to the equivalent of $25,000 a year for full-time work, 437,000 women working in retail today would see their earnings lift them above the level of poverty or near poverty. Family members they help to support would also benefit: altogether nearly 900,000 people would be lifted above the level of poverty or near poverty by a raise for women working at the largest retailers.
Wages that boost the economy, or sink it?
- Today: the pay gap between men and women in retail costs women an estimated $40.8 billion in lost wages annually. Lost wages to women are a drag on the economy, reducing consumer demand and costing jobs.
- If present trends continue: by 2022, women will lose $381 billion in cumulative wages.
- If the nation’s largest retailers raised wages to the equivalent of $25,000 a year for full-time work, the wage gap would narrow significantly even if both men and women got the same raise. GDP would grow an estimated $6.9 to $8.9 billion solely from women’s portion of the raise, or $12.1 to $15.7 billion from both women and men, leading to the creation of 105,000 to 136,000 new jobs.
Schedules that lift up women, their families, and communities, or undermine them?
- Today: Nearly one in every three women working part-time in retail wants to be employed full-time. And even full-time status is not always a guarantee of sufficient hours. Part-timers and full-timers alike must contend with just-in-time scheduling practices that make it harder for women to work their way out of poverty and impose steep costs on the public, taking a toll on public health, education, and opportunity for the next generation.
- If present trends continue: poverty and public costs will continue to grow.
- If the nation’s largest retailers improved by offering sufficient work hours and more stable, predictable schedules, another major obstacle for women trying to work their way out of poverty with retail jobs would be removed and it would help to improve public health, education, and opportunity.
Large retailers can afford to improve women’s jobs—without big price increases.
- The additional payroll costs would represent a small fraction of total sales. The cost of a wage increase to $25,000 a year for full-time work, for both men and women in retail amounts to $21.5 billion, or less than 1 percent of the $4.3 trillion in total annual retail sales. Alternatively, it represents 4.1 percent of 2012 payroll for the retail sector.
- Using profits to pay for better wages and schedules would be a more productive use than the current trend toward stock repurchases. In 2013, the top 10 largest retailers spent $26.3 billion on stock repurchases, billions more than the $21.5 billion all large retailers could have productively reinvested in their workers.
- The potential cost to consumers would be just cents more per shopping trip on average. Calculations from our previous study find that if companies pass half of the costs of a wage increase on to customers, the average household would pay just 15 cents more per shopping trip —or $17.73 per year.
The retail industry has tremendous potential to offer good, family-sustaining jobs to the 7.8 million American women projected to work in the industry in the next decade. If large retailers take action, employees, their families and communities, and our economy as a whole will benefit. If companies fail to change course, poverty jobs in retail will increasingly drag us down.
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