Unwrapping the Economy’s Gift to the Job Market

It’s the most wonderful time of the year. Holiday season! Many businesses brace for this by hiring extra workers for holiday jobs to have enough staff to conduct business operations. Businesses must ensure their shelves are stocked, shipment is received and processed, and online orders are handled properly. However, this year, companies are finding they do not need as many workers to fulfill these holiday jobs.

Retailers expect to hire 410,000 workers for seasonal jobs this holiday season, according to an analysis of non-seasonally adjusted data from the Bureau of Labor Statistics by Challenger. This is the lowest number of seasonal workers hired during the holiday season since 2008.

To also help put this number into perspective, in 2022, 509,300 seasonal workers were hired during the holidays, and in 2021 701,400 workers were newly employed. This then demonstrates that there has been a recent trend of declining seasonal employment during the holiday season. However, what does this mean in terms of the United States economy? It can be assumed that seasonal employment is low for two reasons: low consumer confidence and the nature of retail.

According to the Trading Economics graph, consumer confidence has declined each consecutive month since July. As a result, people are projecting that even though consumer spending has not fallen, there is fear that it will. For instance, economist Morgan Stanley predicted a few months ago that the 2023 fourth quarter would have a “hangover effect on consumption” after consumers splurged this summer, meaning consumer spending would decline. Consequently, businesses could be pulling back on holiday hiring as a precautionary measure if spending slows; that way, they will not get stuck paying for additional labor that is not needed.

Andy Challenger of Challenger, Gray, & Christmas claimed that the decrease in employment is a signal of uncertainty as “employers do not have a good sense of what their hiring needs are going to be over the next few months.”

In addition to low consumer confidence, labor shortages in retail have eased significantly. Chief economist at the National Association of Federally-Insured Credit Unions, Curt Long, shared that “a lot of companies did strong seasonal hiring a year ago, then they did everything they possibly could to retain those employees.” The demand for holiday workers is then reduced since many businesses already have great staffing going into the holiday season. Not to mention, increased use of self-checkout stations also helps businesses not need as many workers.

For these reasons, companies who found it challenging to find people to work during the holiday season, because the work was temporary and had low pay, are now finding it easier to fill these positions because of limited opportunities. These limited opportunities, though, create greater competition, and many people in the United States are feeling anything but holiday cheer as they struggle to fill temporary jobs that used to be somewhat easy to get.