Yahoo Finance What labor shortage? Sam's Club CEO says it has reached full employment
You probably won't be able to find much help shopping at Macy's this holiday season due to the ongoing crippling shortage of retail workers. But if you want the low-down on a $40 cut of steak at Walmart-owned Sam's Club the chances are good someone will be there to field questions.
"We're at full employment in the field," said Sam's Club CEO Kathryn McLay at Yahoo Finance's All Markets Summit. "It's probably the statistic that I am most proud of. Our clubs have been at full staffing for probably over three months."
To be sure, Sam's Club being at full employment inside of its roughly 600 stores is the exception rather than the norm right now in retail.
Employment shortages as the economy bounces back from the pandemic continue to wreak havoc on lower-paying industries such as hotels, trucking and retail. Retail trade employment was down a disturbing 202,000 jobs in September, compared to February 2020, said the U.S. Bureau of Labor Statistics.
For retail, the worker shortage is expected to become more severe as the industry ramps up for peak holiday demand.
The U.S. retail industry will have a labor shortage of approximately 350,000 workers heading into November and December, according to a study from Salesforce. "Many workers are holding out for or leaving for higher wages, while extended unemployment benefits in some states and the gig economy have also had an impact," the study said.
As a result of the shortage, retailers will have to pay up dearly to secure the bodies they need. Target, for example, is investing $75 million in its current workforce this holiday season in the form of offering them more hours.
McLay said the secret sauce for Sam's Club has been a combination of higher wages and a clear pathway for career advancement.
"A little while ago, we announced that we're at $15 as a minimum wage, but our average wage is actually around $17.30. And so that has been a multi-year program to build up our wage rate to make sure that we have what we call destination jobs and career ladders. There's a different kind of methodology for how we reward each role. But some of those destination roles — we're looking at like cake decorators, meat cutters and forklift drivers — we want them to be remunerated in a way that is really attractive and people can see that as a destination job. And then we also have these roles that are more career ladders that will start at the bottom of the rung and work their way up," McLay explained.
Seventy percent of Sam's Club leaders have worked their way up from the front line, according to McLay. The recipe of keeping workers happy appears to be working.
Sam's Club same-store sales rose 7.7% in the second quarter on top of a 13.3% gain a year ago. Second quarter operating profits rose 11.5% from a year ago.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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