Seasonal hiring: Economic boost or blip?

Economists offer differing opinions

Stephen Mally/The Gazette

Cathie McGowan, support supervisor, works on organizing racks of clothes in the door-to-floor
Stephen Mally/The Gazette Cathie McGowan, support supervisor, works on organizing racks of clothes in the door-to-floor process on the loading dock at JCPenney in Cedar Rapids. The store is hiring 60 seasonal associates to supplement its permanent work force. The Texas-based retailer will hire at least 35,000 nationwide.

CEDAR RAPIDS — More than 820,000 people will be hired for seasonal retail jobs this year, up 11 percent from a year ago. But the precise effect on the regional and national economy is not so clear cut.

David Swenson, Iowa State University economist, contends seasonal hiring has a meaningful economic impact.

“When we bring workers on during a period of significantly higher demand, you have more people earning more money during a period of about six weeks,” Swenson said. “That boosts the household spending ability during that time.

“We have to offset that with the fact that those people and other retail workers are laid off in January and February when we’ve all had our Christmas sales hangover. Retailers truly cannot afford to carry any kind of slack in their labor force.”

While some of the additional income is spent on Christmas gifts, Swenson said seasonal employees typically are trying to accumulate additional income for all the basic necessities.

“Their earnings supplement household accounts,” Swenson said. “They buy electricity, fix their cars and pay their rent or mortgage. For many people it is not their primary job but rather a blessed — or cursed — second job.”

The JCPenney store at Westdale in Cedar Rapids has hired 60 seasonal employees to supplement its permanent work force of about 95 people. Store Manager Barry Donavan said university students, housewives, schoolteachers and retirees are sought each year as seasonal hires.

“Cedar Rapids is a low unemployment city, and it’s been very tough finding people to hire this year,” Donavan said. “We are really hitting it hard, sending out fliers, using word-of-mouth, going to area colleges and offering an associate discount, which helps if they are buying gifts.”

Michael Niemira, chief economist and principal with the Retail Economist in Tucson, Ariz., said seasonal hiring is part of a broader story of a seasonal business cycle that affects the whole economy.

“The fourth quarter tends to be the strongest quarter of the year,” said Niemira, who also is a former chief economist with the International Council of Shopping Centers. “That goes to all the seasonal activity — spending, hiring and ripple effects.

“The seasonal cycle is intertwined with the business cycle. Strong seasonal hiring and spending is a precursor of stronger economic activity in the following year. It has a ripple effect that lasts far beyond the six or eight weeks of the holiday season as retailers and manufacturers replenish inventory.”

While acknowledging that “more than a fair amount” of consumer purchases occur during the holiday season, John Solow, professor of economics at the University of Iowa Tippie College of Business, contended that seasonal hiring reduces employment throughout the rest of the year.

“If cameras were sold more equally throughout the year, camera stores would hire more people during the entire year,” Solow said. “There is a ‘bunching up’ of hiring and sales activity during the holiday season. If we didn’t have this phenomenon of Christmas, the same income would be generated throughout the year.”

Solow said seasonal workers do not necessarily spend their earnings immediately on gifts.

“College students may be saving the money they earn to help pay their expenses through the next semester,” he said. “Others use the money to pay down bills or put more money aside for their retirement.

“That’s why it is difficult to measure the overall impact on the economy.”

Niemira said seasonal hiring tends to ebb and flow with the state of the economy. So far this year, seasonal hiring has totaled 888,000 in retail, courier services and temporary-employment agencies, according to the U.S. Bureau of Labor Statistics, a 3.1 percent increase over the 861,000 at this time last year.

Big retailers such as Wal-Mart, Target, Kohl’s, JCPenney and are hiring 304,000 seasonal employees, compared with 283,000 last year, Niemira said. Online sales will drive hiring at fulfillment centers such as Nordstrom Direct in southwest Cedar Rapids, which wants to hire 900 seasonal workers.

“While it varies each year, we feel fortunate that there are many people who do return to work with us each holiday season,” said Dan Evans, Nordstrom business public relations director. “We do expect some seasonal positions to become permanent. The exact number is determined by the needs of the business.”

Donavan at JCPenney said hiring people who have worked during previous holiday seasons sharply reduces the “learning curve” for seasonal hires.

“The training and development time is really short,” he said. “If you have never run a register or worked with people, it’s very tough.

“Our biggest challenge is getting the right people in the right place and making sure we are the right ‘fit’ for the people we have hired.”