Retailers Discover That Labor Isn’t Just a Cost (November 16, 2015)
By Justin Fox, Bloomberg View
For the past couple of decades, retailing in the U.S. has — with some notable exceptions — been a vast experiment in minimizing labor costs.
At the 2009 annual convention of the National Retail Federation, though, Charles DeWitt noticed the beginnings of a shift. “Retailers started coming up to me and saying, ‘We can’t get any more out of this cost stone,'” recounted DeWitt, vice president of business development at workforce-management-software maker Kronos.
Since then, this change in attitude has become the stuff of business headlines. Most notably, Wal-Mart, the retailer that set the cost-cutting tone in the 1990s, has been raising wages and spending more on training. There’s surely a cyclical element at work here — as the unemployment rate drops, it’s harder for retailers to find workers. There’s also a political element — bad press and minimum-wage campaigns must have some effect on corporate behavior.