The holiday season means gifts for children and a large increase in the retail workforce as stores staff up to deal with the holiday rush in November and December.
While that's good news for the unemployed, these jobs are traditionally seasonal and disappear around the same time people throw out their Christmas trees. But for nearly two months, the holiday season offers a big boost to the economy, and this year's hiring spree looks to be one of, if not the, biggest in history.
Retailers in the United States added 434,500 people to their payrolls in November, according to data from the U.S. Bureau of Labor Statistics. That's about half of the workers who will be hired for retail seasonal jobs this year and an increase of 11% a year ago, according to a Bloomberg interview with Michael Niemira, founder of economic forecasting company The Retail Economist LLC. Niemira also states that these are the highest numbers since record-keeping began in 1990.
By the time the holiday season ends about 821,000 seasonal employees will be added by retailers, according to Niemira. But you'll see a different number from being reported by media outlets covering the December jobs report because that total is seasonally adjusted year-over-year number, not a month-to-month improvement.
The Pew Research Center recently released a report that put the gains into context:
Retail payrolls surge in November and December as stores hire for holiday shopping -- typically jumping 3% to 4% between October and December. Last year, for example, retailers added 626,200 jobs in November and December, representing a 4.1% gain. (These are the sorts of predictable moves that are smoothed out in the seasonally adjusted jobs numbers, which generally are the ones that get the most attention.)
These mass hirings help stores brace for the surges in customer volume and spending. Before the holiday shopping season began, the National Retail Federation conducted a survey that found that the average person celebrating Christmas, Kwanzaa, and/or Hanukkah will spend $804.42 this year, up nearly 5% over last year's $767.27.
"Retailers have plenty of reasons to be optimistic this holiday season, and one of the most important pieces of evidence is the confidence holiday shoppers are exuding in their plans to spend on gifts for their loved ones," said NRF President and CEO Matthew Shay.
The bad news for those who benefit from the temporary hiring boom is that retail payrolls typically fall by 5%-6% between the end of December and February. In 2013, retailers shed a combined 880,000 jobs in the two months after Christmas, Pew reported.
Where are the jobs?
Google "holiday jobs," and the first page of search results lists a number of major companies including Macy's (NYSE:M), Toys R Us, and Sears (NASDAQ:SHLD). Wal-Mart (NYSE:WMT) also plans to hire 60,000 seasonal workers, up 10% from last year, and even the struggling J.C. Penney (NYSE:JCP) will add 35,000 workers, according to Fox Business. Target told CNBC it plans to add 70,000 seasonal workers this holiday, about the same as last year. Online retailers are part of the hiring spree as well. Amazon (NASDAQ:AMZN) plans to add 80,000 workers at its fulfillment centers across the country, an increase of 14% over last year, The Wall Street Journal reported.
Traditionally, clothing retailers, department stores, general merchandise stores, and sporting goods retailers tend to increase their work forces by the biggest amounts for the season. There are generally more modest increases at electronics retailers, food stores, and furniture dealers.
It's good, but not all good
For the unemployed, the holiday hiring boon can a blessing, albeit a short-lived one in most cases, but it's not impossible to turn a seasonal job into a permanent one.
While it's not a retailer, UPS (NYSE:UPS) is one of the biggest seasonal employers, with plans to add 90,000 workers this holiday season. The shipping company hopes to make some of those employees permanent.
"Individuals who begin employment at UPS during the holiday season have the opportunity to pursue a permanent position afterwards," John McDevitt, UPS senior vice president of human resources and labor relations, said via press release. "Seasonal positions provide an excellent entry point for becoming a long-term UPS employee."
Toy R Us, Wal-Mart, and Target have also, in past years, made some of the best seasonal workers permanent, and for those seeking to secure a regular job, it's all about being a good seasonal worker.
"It's critical to demonstrate that you're a valuable member of the team," John Challenger, CEO of Challenger, Gray & Christmas, a Chicago-based global outplacement and career transitioning firm told The Chicago Tribune. "Thus, you not only have to do what's asked of you (and do it well), but you also have to go above and beyond. Ask for additional responsibilities. Be available to work whenever the employer needs you."
While higher seasonal hiring is a good sign that the economy is improving, the real test will be whether there are permanent jobs created for people who want -- and earn -- them. That only happens if retailers have a strong holiday seasons, which requires people to not only spend, but spend on items other than the ones with biggest markdown.
More jobs, even if only for a short time, leads to more spending, which in turn leads to more jobs. This could be the holiday season where the economic recovery becomes something Americans believe has really taken hold. This could be year when holiday hiring sprees, coupled with strong sales, lead to increased employment beyond the holiday season.
Daniel Kline has no position in any stocks mentioned. He has never held a seasonal retail job, but he did spend two years hiring seasonal workers as general manager of a very large, independent toy store. The Motley Fool recommends Amazon.com, Google (A shares), Google (C shares), and United Parcel Service. The Motley Fool owns shares of Amazon.com, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.