Frank Franklin II/AP
Pedestrians pass the Dow Jones display ticker in Times Square on Wednesday in New York. U.S. shoppers spent cautiously this holiday season, a disappointment for retailers who slashed prices to lure people into stores and now must hope for a post-Christmas burst of spending.
Several large retailers took a leap of faith on what they thought would be a gangbuster holiday season, hiring more seasonal workers this year than last.
Sales during the two months before Christmas weren't all that stunning, however, and that's meant fewer opportunities for seasonal workers.
Some of them worked vastly fewer hours than they expected. Onieka O'Kieffe, 23, was hired by Lush Cosmetics in midtown Manhattan for the holiday season. Lush told her she'd be working 20 to 30 hours per week, she says, but instead, she's getting only 10 hours a week, at most. That's bad news for someone who has a few thousand dollars of credit card debt. O'Kieffe says she's losing out on hours because Lush just hired too many people this holiday.
"There's been times where there's 10 of us in the store and there's no customers," O'Kieffe says.
A spokesperson for Lush says the company urged its stores to ramp up hiring at the beginning of the holiday season, and to scale back on workers' hours depending on foot traffic in stores and how heavily the stores were staffed. The spokesperson added that no seasonal employee at Lush was guaranteed minimum hours.
A Sluggish Holiday
Recent data suggest holiday retail business increased this year, but just barely. An estimate by Mastercard Inc.'s SpendingPulse unit shows sales grew 0.7 percent. That's the slowest rate since 2008, when retailers were feeling the worst of the recession.
When profits shrink like that, seasonal labor costs are the easiest cost to cut, says Diane Swonk, an economist at Mesirow Financial.
"The problem is, yes, these are disposable workers. I hate to say that, because I don't mean that about the people, but the reality is, when you got to cut hours, you do cut hours," Swonk says.
Retailers had a lot of other problems to tangle with this holiday season. Superstorm Sandy forced stores in some regions to temporarily close. Swonk says New York and New Jersey alone account for 12 to 13 percent of all retail sales in the country.
Then there's that looming fiscal cliff that's getting the blame for slumping consumer confidence in December. Retailers say to make up for lost business, they now have to resort to huge discounts after Christmas, which will further eat into profits.
But Kathy Grannis of the National Retail Federation points out it's nowhere near as bad as it was four years ago.
"The panicked, unplanned promotions are what we saw in 2008, when inventory had not moved and retailers had no choice but to throw deep discounts on everything in their stores and on their websites," Grannis says. "We're very far from that level of panic right now."
But don't assume this holiday season is a bust just yet, Grannis says; the last week of December usually rakes in about 15 percent of a store's entire holiday business. On top of that, early January is when people start streaming into stores to use their gift cards.
Too Little, Too Late
Browsing sweaters in midtown Manhattan on a recent afternoon, O'Kieffe says it's kind of a bummer when you work in retail because you love retail, but you can't purchase most of the what you see. Even when it's on deep discount after a lackluster holiday season.
"It does kind of suck that it's like, you work so hard and so long, and you can't really afford to buy anything you want," O'Kieffe says.
Because she couldn't get enough hours at Lush, O'Kieffe's now working two jobs. But her hours are totally unpredictable, and sometimes her two shifts will conflict so she has to drop one of them. Other times, two jobs mean an 11-hour work day, with a two-hour subway ride in the middle.
"Sometimes I have days off from both jobs, and on those days off, I usually spend them in bed because I'm so tired," O'Kieffe says. "Or I don't even leave the house because I'm so tired from working both jobs."
Even with those two jobs, she says, she's barely able to cover her expenses. She's bracing for more stressful days ahead, since Lush has already told O'Kieffe her seasonal job won't last into January.