As COVID-19 recovery continues and local minimum wage laws increase, we examine the impact on the retail market to assist business leaders as they consider how to optimally structure and reward their workforce. In response to the COVID-19 pandemic and a rapidly increasing digital world, retailers have made significant investments to enhance customer experience as buyer habits continue to favor online purchases. Despite these investments, experts expect store traffic will not rebound to pre-pandemic levels. Adding to the disruption in the retail sector, many local and state governments have passed, or are debating, laws that increase the minimum wage — causing HR and business leaders to carefully consider the impact to their workforce and compensation programs. To assist our clients in monitoring changes to retail jobs and wages, we launched the U.S. Retail Labor Market Dashboard in September 2020. This dashboard tracks the number of job postings and median offered wages across three retail job categories: store associate, fulfillment and delivery. It enables us to compare how the demand for jobs has grown and wages change in real-time across the U.S. With a rebounding economy, pending changes in workforce structure and potential for new legislation, retailers must remain watchful of local labor market dynamics. In this paper, we look back at six-month trends in retail jobs and wages and consider the outlook for the sector given the current market conditions. Changes to Retail Jobs and Wages in the Past Six Months As the vaccine rollout continues and we head into warmer weather, the U.S. retail labor market does show signs of improvement. While store-based jobs experienced the most significant declines overall in both median offered wages and the number of job postings over the past six months, likely as a direct result of the pandemic, by the end of February, we saw growing strength across all retail roles. The largest demand was for fulfillment jobs, which rose by 67% month-over-month (See Figure 1). Overall, median offered wages have recovered as well, rebounding past initial pandemic levels. In November 2020, when the U.S. experienced another surge in virus cases, we saw year-over-year wages for store employees decline by 5.7%. However, median offered wages across all categories have increased since then, with the greatest gains for delivery jobs. Delivery jobs continue to command the highest levels of pay along with the biggest increase in growth. The data represents wages from a wide variety of retailers, including gig delivery drivers and established parcel carriers. Established carrier jobs are driving up wages overall, but we expect that as a greater proportion of purchases are made through online channels, demand for delivery workers will continue to rise along with median pay. While the sector has seen a significant shift toward more e-commerce, it still appears that two-thirds of all retail job postings are for store associate jobs. We know that many retailers have adapted in-store roles to include fulfillment responsibilities, which could explain this unexpected trend. Store-based roles are often more conveniently located to workers, have pleasant work environments and are lower-cost jobs compared to distribution jobs — typically by $2 to $3 per hour. Therefore, it’s probable that we could see minimal changes in job mix between store and distribution jobs in the near term. The Impact of Minmum Wage on Job Growth The new White House administration, along with a concentrated focus on income inequality, has put national minimum wage legislation in the spotlight once again. Policymakers and economists on both sides of the aisle are actively debating what impact raising the minimum wage would have on businesses and the overall economy. Critics suggest that an increase would reduce the number of jobs and result in a loss of small businesses, while proponents claim that it would spur growth, as a large segment of the population would have greater spending power. Absent of a national increase, many local governments are acting on their own. The city of Denver, CO, for example, increased its standard minimum wage for all citywide workers in 2021 to $14.77 per hour. To examine this further, we looked at our U.S. Retail Labor Market Dashboard to see if there were differences in year-over-year retail job posting growth for states (including Washington, DC) that have a minimum wage in place beyond the $7.25 federal minimum (31 total) vs. those that do not (20 states). While overall, the 31 states with a minimum wage exceeding the $7.25 guideline saw a slightly greater decline in the number of job postings of two percentage points, they experienced far greater growth in fulfillment roles and less dramatic declines in delivery jobs — both of which pay considerably more than store-based roles. We also examined the segment of the states where the minimum wage currently exceeds $12 and/or is slated to rise to at least $15 per state legislation (12 states, plus Washington, DC). The findings held true to an even greater degree. On average, states with a higher minimum wage have lower job growth. However, the decline is observed in lower-cost store jobs rather than higher-paying fulfilment and delivery jobs. Next Steps The future of work in retail is shifting to match the expressed needs of consumers that want convenience and immediate gratification at the best price. We expect store associates will likely shrink in numbers, but probably not as fast as may be expected given the growth in e-commerce. As retailers expand the job duties of store workers to maximize their workforce investment, business and HR leaders need to ensure they are hiring and reskilling with these evolving job duties in mind. The good news for store-based workers is that they will likely be rewarded for this flexibility, as they assume more delivery and fulfillment responsibilities — both of which will require higher wages to compete with broader distribution and delivery roles. This evolution may make the minimum wage debate moot since workers in these roles are already being paid above minimum wage for even the lowest paying employers. The future of work in retail is shifting to match the expressed needs of consumers that want convenience and immediate gratification at the best price. To learn more about our retail database and how we support organizations with their workforce and rewards planning, please write to firstname.lastname@example.org.