/ Future Focus

Seasonality & Hiring Part 3: Retail

Read part 1 of our report on Accounting, Law, Finance, and Healthcare industries.

Read part 2 of our report on the Technology industry.

Small business job growth in the Brick and Mortar Retail industry peaks in the spring and fall, according to new data from Guideline, whereas Online Retail does not show as pronounced of a pattern in employment seasonality. The Leisure industry has strong growth in both the spring and fall, although this varies by state.

We’ve been crunching the numbers on employment at small businesses that offer their employees a Guideline 401(k) from 2015 to the present, to find out what patterns emerge throughout the year. The first post in this series looked at seasonality in job growth in the professional services and healthcare industries, and the second post considered the technology sector. This third and final post compares Online and Brick and Mortar Retail, and takes a close look at the leisure-related industries of Arts, Recreation, and Hospitality.

Most jobs data is seasonally adjusted, in order to focus on the economic expansion and contraction of the business cycle, and on long-term changes in the structure of the economy. But as an employer or employee, it can be helpful to keep in mind that the month matters in the retail and leisure industries, because job growth tends to happen unevenly throughout the year, due to factors such as the weather, vacation season, and holiday shopping.

At small businesses that offer a Guideline 401(k), job growth in Brick and Mortar Retail shows a pronounced seasonal pattern with a peak in April, another in October, and slow periods with near zero net job growth in July and December. In contrast, small businesses in Online Retail do not show such a distinct pattern of seasonality, with slightly higher net job growth in the summer, on average, than the winter and spring.

The Arts, Recreation, and Hospitality industries show a dramatic spike in job growth in May, in advance of the summer vacation season. In July, net job growth slows to near zero--possibly because during the mid-season rush, small businesses are too busy to recruit and hire.

At both small and large businesses, retail is highly seasonal and has little variation from state to state, but the leisure industry is both highly seasonal and has great variation across the country, according to data from the Federal Reserve Bank of Chicago. This Federal Reserve analysis, based on data from the Bureau of Labor Statistics, compared seasonality in Leisure employment in a handful of states with very different weather and patterns of tourism, showing how local conditions shape this industry.

A quick note on the Federal Reserve’s data: whereas the above Guideline data shows the average rate of month-over-month increase in the number of jobs, the Fed’s data looks at the total number of jobs in any given month as a percent higher or lower than the annual average. They’re slightly different metrics, with Guideline’s data zeroing in on times when hiring activity tends to be higher, and the Fed’s data identifying when the number of employees is greatest.

According to the Federal Reserve, in Maine, tourism primarily occurs in the summer, when people head to the coast to beat the heat; and employment in Maine’s Leisure industry shows greater seasonality than the other states considered, with summer employment levels over 20% higher than the annual average.

Adjacent to Maine, but with a bigger emphasis on skiing and other forms of winter recreation, Vermont has a distinct peak in Leisure employment for the winter, and another in summer.

In contrast, the warmer destinations of Florida and California have much less pronounced patterns of seasonality. Florida’s Leisure industry has slightly more employees in the spring, as people escape winter for spring break and other vacations; whereas California’s Leisure employment crests in mid-summer.

For job seekers: Does this mean it’s hopeless to look for a Leisure industry job in January in Maine, or in a Brick and Mortar Retail small business in July? Not necessarily. While these are off-peak periods for employment and job growth, we think that this data suggests how specific employment patterns can be, based on the nature and business model for each business and its context. After all, the Arts, Recreation, and Hospitality industries businesses ranging from theaters, amusement parks, bowling alleys, marinas, ski resorts, restaurants, and hotels--and a small business in each of these areas may have its own busy season and trajectory of growth.

For small businesses: If you’re looking to hire people with experience in the Leisure and Retail industries for your fast-growing small business, or for one whose seasonal needs are off-kilter with your local scene, knowing these seasonality patterns presents an opportunity. Advertise your job openings as the busy season winds down, to catch the attention of job seekers as they become available.

Are you a small business looking for a simple and affordable 401(k) plan to offer to your employees? You can get started with Guideline at www.guideline.com, or email us at [email protected] to get answers from a specialist.

Methodology:

We analyzed anonymized employment data from over 9,000 small businesses that offer Guideline 401(k) plans. Our analysis counted job gains based on payroll data from company expansions and job losses from company contractions, but not gains and losses due to companies being founded or going out of business. Companies were classified into industries based on the North American Industry Classification System (NAICS) code each company selected in their Form 5500 publicly filed with the Internal Revenue Service (IRS).