From Home Furnishing Business
Statistically Speaking: Pandemic-Fueled Increases in Industry Prices and Wages Begin to Cool
During the years prior to the pandemic, inflation stayed low and furniture industry wages remained relatively flat. However, in the last half of 2019 and subsequently through the pandemic shutdown, wages edged up slightly faster than inflation. Then when furniture stores reopened in the second quarter of 2020 amidst a tight labor market, wages accelerated at a much faster pace than furniture prices, even with demand skyrocketing. However, that growth was short lived throughout 2022 with prices continuing to rise, but wages stabilizing. Table A graphically illustrates the timeline of the ongoing economic impact of the Covid-19 pandemic on furniture store prices and wages. As furniture store workers celebrated the rapid rise in wages, the real impact of inflation hit full force. Like most of the country’s businesses, inflation has eaten away all the furniture store salary increases (Table B). In 2019 Q1, actual weekly wages averaged $759 and increased 17.4% by 2023 Q1 up to $891. Meanwhile, inflation grew 17.8% over the same period.
This article comes on the heels of last month’s installment of Statistically Speaking entitled, “Furniture and Home Furnishings Stores Face Marketing Challenges” and addresses employment and wages in retail brick and mortar distribution channels that serve the furniture industry.
Where Have the Workers Gone?
Retail companies add employees when demand dictates. An interesting statistic, and perhaps a key one for brick-and-mortar furniture distribution channels, is that since 2017, most retail store types decreased in number of employees, especially retailers whose main product line is furniture and home furnishings (Figure 1). In other words, the highest year of employment was back in 2017. eCommerce growth is no doubt a significant part of the reason. Furniture store employment, however, fell only 3.1% during this period, the best performance of the “2017 highest employment” groups featured in Figure 1.
The stores that did add employees throughout the pandemic and beyond were home centers and other building material dealers, up 4.2% in workers 2017 to 2023 Q1, with employment peaking in 2021. Other retail outlets gaining employees were warehouse clubs and superstores, up 9.7% and still growing through 2022, and lawn and garden equipment retailers, increasing 13.0%. These retailers that are still growing reflect the cultural attitude prevalent during the pandemic as consumers began to place greater importance on their homes and purchased accordingly.
One key shift that has occurred among the workforce is that the ratio of workers in the total workforce that are in supervisory or non-production roles has grown over the last four-plus years compared to the decline in the percent of production workers and NONsupervisory employees (Tables C-1 and C-2). The ratio for the total retail trade has remained stable at 14.9% in both categories, but in most all furniture distribution categories the percent of the workforce that is now in supervisory or non-production jobs has grown. For furniture retailers, in 2019 Q1 17.2% of employees were considered supervisory or non-production, compared to 19.3% in 2023 Q1.
Tables D-1 and D-2, show that the decline in employees is caused by a decrease in production and non-supervisory workers, while supervisory and non-production workers increased for most retail store types. The production/non-supervisory category declined 5.7% for furniture retailers and 15.6% for home furnishings stores.
Table D-2 shows that among the other retail store types, home centers, paint, wallpaper and other building material dealers showed a more stable employee mix between the two categories, with production/non-supervisory employees declining 1.0% in number, and supervisory/non-production workers falling 1.6%. This retail outlet had the lowest total employees decline of 1.1%.
Among the various furniture and home furnishings retail distribution outlets, floor covering retailers have the highest hourly wages at an average of $32.69 (2023 Q1) followed by electronics and appliances at $27.38 (Figure 2). Furniture stores and home furnishings stores are next at $26.36 per hour and $26.33 per hour. General merchandise retailers, which broadly includes warehouse clubs, superstores, department stores, and other general merchandise retailers, averaged $21.03 per hour. Home centers average $22.04 and hardware retailers, $21.69. The combined average hourly wage for all employees in the U.S. retail trade in all product areas in 2023 Q1 was $23.72. Figure 2 also highlights the vast difference in the growth of wages since 2019 and throughout the pandemic and inflationary period. The highest hourly wage growth was among floor covering retailers of 27.28% 2019 Q1 to 2023 Q1, far outpacing inflation, followed by home furnishings stores at 22.38% and furniture stores at 18.19%. The lowest hourly wage growth 2019 Q1 to 2023 Q1 was among electronics and appliances stores at 3.76%.
Of note is that hourly wages of furniture retailer employees declined 3.6% in 2023 Q1 over the prior 2022 Q4, the highest decline of all distribution channels (Figure 2). All other distribution channels showed increases, except furniture retailers and floor covering stores.
The wage growth of these distribution channels during the two years prior to the pandemic and through 2023 Q1 shown in Tables E-1 and E-2, contrast the differences in the average hourly wages. Table E-1 shows average hourly wage for the primary brick and mortar distribution channels 2018 through 2023 Q1. Note the significantly higher wages of floor covering stores followed by furniture/home furnishings stores.
Table E-2 graphic shows the other distribution channels where furniture/ home furnishings are not the primary product categories. The higher wages for electronics and appliances retailers stand out in this graphic.
In the desperate search to hire and maintain production and non-supervisory employees for many retail store types, including furniture stores, the rate of hourly wage growth was higher for these workers than for supervisory and nonproduction employees (Figure 3). Hourly wages for production and non-supervisory employees grew 24.1% between 2019Q1 and 2023Q1 for furniture stores compared to total retail trade employee hourly wage growth 20.4%. For home centers, paint, wallpaper, and other building material dealers, hourly wages for production and nonsupervisory employees skyrocketed 44.8%.
As discussed previously, most of the salary growth among retail employees has been mitigated by inflation. So, the final question to be answered is: If hourly wages grew faster than inflation, why did weekly wages struggle to keep up with inflation. Part of the answer is that employees worked fewer hours through 2021 and 2022 as inflation soared. The lost hours are not dramatic, but they add up (Figure 4). For many retail store types, the average employee works fewer than 30 hours a week. The maximum average weekly hours for any of the retail channels discussed in this article is 35.4 in floor covering stores. With inflation ebbing, where are we now? Fewer workers, with higher wages, and working less hours than ever before.