No one needs to hear more bad news about the economy, but it keeps coming anyway.
Last week Circuit City, the nation’s second largest electronics retailer filed for Chapter 11 bankruptcy protection. 8,000 jobs will be lost. It’s the latest of 14 major retail chains, including Steve & Barry’s, Mervyn’s and Linens ‘n Things to file for bankruptcy protection in the last 12 months.
And since most can’t line up financing to reorganize and come out swinging, they simply liquidate and disappear.
A tenth of the American workforce works in retail, but in the last year a quarter of all US job losses—320,000 according to the Wall Street Journal—have been in this sector. This doesn’t include another 200,000 workers whose employment has been switched from full- to part-time.
The pummeling of retail speaks volumes about the severity of the Great Economic Crisis of 2008. In mild recessions such as the one linked to the dot com collapse and the terrorist attacks of 2001, retail employment hangs in there for a long time because consumers continue to spend, maybe not as much but at least some.
Not so this time. Job losses in retail are already more severe than in financial services, automotive manufacturing and hospitality, and experts think the worst is yet to come.
Now for the bad news. Retail jobs have traditionally served as an economic safety net for Americans. If we needed a second job to make ends meet, we found it in retail. If we got laid off from a manufacturing job, we ended up in retail. If we were fresh out of college and couldn’t get a dream job, we headed for retail. Same thing if we didn’t go to college in the first place.