On the campaign trail, then-president-elect Donald Trump focused on the large number of manufacturing jobs that have been lost in the U.S. Between 2000 and 2010, the U.S. lost about 5.6-million manufacturing jobs. Eighty-five percent were a result of technological chances, largely automatic, the remainder largely from international trade.
In the past, when major industries left small cities and towns, those out of work could rely on the retail industry to fill the void. But mot anymore. While automation is busy transforming American factories, the U.S. retail industry is being hammered by online shopping. And with retail taking a beating, there is nothing for the local economy to fall back on, especially in the Midwest and Northeast.
While stores in vulnerable economies drop retail jobs because of the growth in e-commerce, the latter isn’t picking up the slack. Growth in e-commerce jobs like engineering and marketing tends to be found in larger cities, far away from the small towns that are being hurt the most by the loss of retail jobs.
According to the most recent data, rural counties and small metropolitan areas make up roughly 23% of traditional retail employment in the U.S. However, those same areas are only home to 13% of e-commerce positions.
E-commerce may be responsible for the growth of other industries, including warehouses and customer service, but most of those jobs are not being created in distressed economies, but rather in larger urban areas.
Almost all warehouses and customer fulfillment centers run by Amazon are in metropolitan areas with populations greater than 250,000.
“Every time you lose a corner store, every time you lose a restaurant, every time you lose a small clothing store, it detracts from the quality of life, as well as the job loss,” said John McGrath, a professor of management at the University of Pittsburgh Johnstown.
Johnstown, Pennsylvania, located 67 miles east of Pittsburgh, was once known for its steel industry and providing steady, well-paying factory jobs. All that changed in the early 1980s, when the U.S. was hit by a recession. Tens of thousands of steelworks in Johnstown lost their jobs as a result, and they never returned.
In Johnstown, the Bethlehem Steel Corporation, which had been the town’s biggest employer for decades, slashed its workforce from 13,000 to about 2,800 in the early 1980s. It fell to zero when the Johnstown plants of Bethlehem Steel were closed in 1992.
During the depth of the recession in 1981-1982, 65% of Johnstown-area steelworkers were unemployed. It didn’t help matters that cheaper, foreign made steel, subsidized by foreign governments, was being dumped in the U.S.
Like other areas hit by the recession, when factory jobs left, people instead turned to working in the retail sector. But even that was short-lived; since 2001, the Johnstown metropolitan area has lost 19% of its retail jobs.
Big box retailers like Wal-Mart Stores Inc (NYSE:WMT) picked up some of the slack, but even they can’t make up all the jobs lost to e-commerce. E-commerce companies might have no trouble attracting business from small towns across America, but they don’t employ them.
Roughly 15.9-million Americans work in retail, a traditional entry point for teens and low-skilled workers. It was also seen as a safe harbor for those who had lost their jobs, like in Johnstown.
Fast-forward to June 2017, and American retail workers have now lost jobs for four consecutive months. Since the start of 2017, the U.S. has shed approximately 80,300 retail jobs, a trend which will continue. Without traditional brick-and-mortar stores and malls, it’s difficult to see how those who were employed in the retail sector will find other work.
“In Towns Already Hit By Steel Mill Closings, A New Casualty: Retail Jobs,” The New York Times, June 25, 2017.
“Most US manufacturing jobs lost to technology, not trade,” Financial Times, December 2, 2016.
“Steel Industry Woes Weigh Heavily on Johnstown,” The New York Times, October 3, 1982.