Deep Drop in Retail Trade Employment during the 2007-09 Recession

By McCall, Michael D. | Monthly Labor Review, April 2011 | Go to article overview

Deep Drop in Retail Trade Employment during the 2007-09 Recession


McCall, Michael D., Monthly Labor Review


Retail trade lost 1 million jobs (1) during the recession which began December 2007 and ended June 2009.2 The 6.7 percent decline in retail trade employment exceeded the rate of job loss for total nonfarm employment by 1.3 percentage points but was consistent with the 6.6 percent decline in private industry employment over the same period.

Employment in retail trade peaked in December 2007, coinciding with the start of the recession; the peak in total nonfarm employment took place a month later. Between the retail trade employment trough in July 2003 and its peak in December 2007, retail trade had added 697,000 jobs; thus, job losses during the recession more than offset job gains during the previous employment expansion.

Compared with the previous 11 recessions since 1945, retail trade job losses during the 2007-09 recession were the largest in magnitude and, on both actual and annualized bases, in percent change. (See table 1.) Among the earlier periods, the most rapid decline, at 3.9 percent, occurred during the 1957-58 recession.

The initial periods of economic recovery following both the 1990-91 and 2001 recessions have both been termed "jobless" recoveries because total nonfarm employment did not begin to recover until many months after those recessions ended. The 1990-91 and 2001 recessions each lasted 8 months, while the 200709 recession extended out 18 months. During the latest recession, retail trade employment declined a bit faster in the initial 8-month period and performed much worse over the entire 18 months than it did during both earlier downturns. The 10 months following the end of the previous two recessions posted retail trade job losses at about the same rate as during the 8 months of the recessions. By contrast, during the last 10 months of the 2007-09 recession, job losses accelerated. (See chart 1.)

Both real retail sales--which are sales deflated for changes in the Consumer Price Index (3) (CPI)--and retail trade employment reached their most recent highs at approximately the same time. Real retail sales peaked in November 2007, 1 month prior to the peak in employment. (4) However, real retail sales reached a low in March 2009, 9 months before retail employment reached a trough. This delay in recovery of retail employment relative to a rebound in sales is not unusual; retail employment also lagged real retail sales by about 1 year following the 2001 recession. (See chart 2.)

All retail trade industries lost jobs

During the initial 4 months of the 2007-09 recession, modest job losses occurred in five detailed industries within retail trade--motor vehicle and parts dealers, furniture and home furnishings stores, building material and garden supply stores, clothing and clothing accessories stores, and general merchandise stores. By the end of the recession, however, every retail component industry had experienced employment losses. (See table 2.)

[GRAPHIC OMITTED]

Motor vehicle and parts dealers lost the greatest number of jobs during the recession, 271,000. Of that loss, 85 percent occurred in automobile dealers. These job losses coincided with declines in auto unit sales, which fell from an annualized rate of 15.7 million units in December 2007 to 9.8 million units in June 2009. (5)

Furniture and home furnishings stores posted the largest loss as a percentage of its workforce, 21.6 percent. Employment declines in this industry and in building material and garden supply stores coincided with the collapse of the housing market. As with residential construction employment, both furniture and home furnishings stores and building material and garden supply stores reached employment peaks in 2006, (6) well before total nonfarm employment peaked in January 2008.

Clothing and clothing accessories stores lost 161,000 jobs--a 10.6 percent decline--during the 2007-2009 recession. Employment in this industry had peaked in November 2007, 2 months prior to the peak in total nonfarm jobs, and reached a trough in October 2009, 4 months prior to the trough for total nonfarm employment. …

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