Small towns are collapsing as retail jobs evaporate leaving thousands of workers with an uncertain future

Thursday, July 06, 2017 by

HEADLINE: Murder. Jobs are being killed left and right — their lifeless bodies thrown rather haphazardly on the streets as onlookers watch meekly by the sidelines. Police suspect e-commerce stores and its accomplice, automation. Despite the outrage felt by the victims and their families, authorities say they are powerless to stop such a deadly (and frankly, inevitable) chain of effects sparked by online shopping.

It seems rather crude, doesn’t it? Still, it illustrates the sad reality that thousands of workers, especially those in rural America, are in danger of losing their retail jobs soon. In an editorial posted on NYTimes.com, the “retail apocalypse” was aptly described as a chain of events inadvertently caused by automation and online technology. The article itself is rather long, but can be summarized by a comment made by one Dawn Nasewicz, a store manager at Ooh La La, which sells prom dresses and embroidered jeans.

“I need my income. I’m 53. I have no idea what I’m going to do.”

Nasewicz’ sentiments are echoed by the thousands of workers who are now facing unemployment due to the rising popularity of online shopping. Those most at risk of losing their jobs are said to be people residing in smaller, rural cities such as in the Midwest and Northeast. What makes this crisis different from other areas affected by automation is the observation that online retail stores rarely absorb physical employment. To wit: 23 percent of the population in small metropolitan areas work in American retail jobs, but only 13 percent of them are in e-commerce positions. This suggests that technology, in its efficiency, is also eliminating the need for actual human workers. This places workers like Nasewicz in a pickle. What would happen to the people whose employment history is mostly centered on retail sales? Where can they go?

Rainy skies ahead

What we are witnessing is almost extinction-like levels of retail stores. An article posted on TheAtlantic.com noted that there have already been nine retail bankruptcies in the first quarter of this year alone — almost as many as in all of 2016. Major retail brands such as J.C. Penney, Macy’s, and Sears have announced more than 100 store closures. Even supposedly invulnerable and highly-popular Payless recently filed for bankruptcy.

The reasons behind this phenomenon can be summarized in three points:

  1. Online shopping – Brick-and-mortar shops are simply irrelevant — at least in most people’s opinions. There is convenience in shopping for things online. This extends beyond merely scrolling pages and choosing an item. Many online stores offer cheap and easy delivery options as well as return policies. Moreover, the success of various retail startups has forced physical store owners to transition to the online environment as well. 
  2. We are no longer mall-rats – Between 1970 and 2015, the number of malls in the U.S. grew twice as fast as the population, according to Cowen and Company’s research analysts. Their results are also seen in the Atlantic article. Unfortunately, mall visits declined by half between 2010 and 2013 and has been steadily declining ever since. This can be attributed to recent economic recessions which forced consumers to focus more on essentials rather than trendy items.
  3. Shifts in priority – Current government policies have increased the minimum wage for low-income workers. That’s great news, but also places pressure for low-margin companies that rely on cheap labor — like retail stores. In a bid to save on expenses, many smaller stores opt to maintain only a skeletal staff and transition a portion of production online. (Related: Automation robots to result in huge job losses for Americans.)

There is no doubt that technology will continue to grow — perhaps at a pace that we are unprepared for — and continue to affect various industries. Unfortunately, these effects can dramatically change the lives of many of us and we could be left hanging with no safety net.

Sources include:

NYTimes.com

TheAtlantic.com

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