In retail, life on the job often leads to a dead end

The entrance to Juicy Couture's flagship store on Fifth Avenue in New York. Joe Kohen/Getty Images

(MoneyWatch) Latoya Simpson did everything right -- and paid the price.

The 22-year-old was studying radiology at New York City College of Technology last year and making $13.50 an hour as a full-time cashier at Juicy Couture, in the women's apparel maker's Fifth Avenue store in midtown Manhattan. Then she said the company gave her a choice: Either make herself available to work more, which would require her to quit school, or go part-time, resulting in a big drop in pay. It wasn't that store managers wanted her to work more hours -- they just wanted her to be around in case they needed her.

Unable to make ends meet on a part-timer's income, she reluctantly set aside her studies. "I felt that was unfair because when they promoted me to full-time they said it was fine for me to go to school," she said. "Then they gave me an ultimatum about dropping out of school or opening up my schedule. I had bills and rent to pay, so I kept the full-time position and stopped going to school."

Vito Amati/Getty Images

In March, only a few months after leaving school and after nearly four years at Juicy, she was fired for violating the company's lateness policy.

Simpson's experience and that of other current and former Juicy employees typifies the squeeze faced by workers across the retail industry. Juicy, a once trendy brand that has lost allure in recent years under the management of corporate parent Fifth & Pacific (FNP), has in recent months pushed to replace higher-paid full- and part-time workers with part-time employees earning far less, they said. Workers also said managers slashed hours for more highly paid personnel, who could earn upwards of $15 an hour, even as the company hired part-timers willing to work for $9 or $10 an hour.

The story is also made more complicated by politics: Several ex-employees said they were told that the retail chain was capping people's hours partly over concerns that workers might qualify for health benefits when the Affordable Care Act takes effect in 2014. "Some managers said, 'You can thank Obama for this'," said Ali Marshall, 22, a former Juicy cashier who earned $12 an hour until she was laid off in March, in relating one reason she says she was told when her hours were cut in half earlier this year.

Juicy Couture denies that it has recently capped or reduced employee hours, while acknowledging that business after the holidays tends to drop off, reducing the need for seasonal workers. "Our hours for both full-time and part-time employees are consistent with comparable periods in prior years," said Jane Randel, senior vice president of corporate communications and brand services at Fifth & Pacific, in a written response to questions. "Like every other retailer, we face and respond to seasonal fluctuations."

Fifth & Pacific also said that the average hourly pay rate for part-time employees has risen since last year and that it has increased the number of full-time employees, relative to part-timers, across Juicy. Last fall the company laid off more than a fifth of Juicy's workers. The company said it is studying the potential impact of the health law, known colloquially as "Obamacare," but that it has yet to discuss with managers how the company will comply with the ACA.

Shrinking hours, shrinking pay

If these employees tell the same story, it is by no means one that is unique to Juicy Couture and Fifth & Pacific. Rather, it is increasingly the norm among retailers, which employ 1 in 10 New Yorkers and 1 in 9 people nationally. For these workers, whether at industry Goliath Wal-Mart (WMT) or at direct Juicy rivals such as Banana Republic and The Gap, retail jobs typically do not offer a living wage, let alone a leg up into the middle-class. Rather, with even full-time workers struggling financially, they are far more often a pathway to poverty.

"It's not just happening at Juicy Couture -- it's widespread," said Susan Lambert, a professor of organizational theory at the University of Chicago and an expert in work-life issues. "People at the top of every company will say, 'That isn't our policy.' And of course it's not. But what happens is that firms set up incentive structures without thinking through their implications at the front lines."

Retail jobs have long been lower-wage. Among full-time workers, hourly wages range from $14.42 on the high end of the scale to $9.61 for lower-paid people, according to Demos, a New York think-tank. Part-timers generally make much less, with wages of $9.61 on the high side and $8.25 on the low (see chart below). The typical retail salesperson makes $21,000 per year, while cashiers earn $18,500.

But the erosion of labor protections, corporations' focus on their share price and developments in workforce management technologies are today combining to make such work increasingly precarious. Full-time jobs are being replaced by part-time positions offering diminishing hours, usually with no benefits and no paid time off. Roughly a third of U.S. retail workers typically work less than 20 hours a week, research shows, while 18 percent work less than 15.

As a result, with companies employing large numbers of part-timers and hours hard to come by, workers increasingly find themselves competing not with the store down the street, but with each other.

Meanwhile, the use of "flexible" labor practices is making life difficult for millions of retail and other employees. Employers are not only keeping a lid on hourly wages, but also rationing hours while requiring workers to be available to work at all hours of the day or night, on weekends and during holidays.

The upshot: With the retail sector shaping up to be the second-largest provider of jobs in the U.S. over the next decade, a growing swath of America's workforce can no longer be sure from one week, day and even hour to the next when they will work or how much they will earn.

Demos


Counting time

Many companies use scheduling, workforce "optimization" and other software to help manage employees. What is changing is the growing adoption of so-called just-in-time and "on call" scheduling, especially in service industries, as stores seek to match the number of workers they have on the floor to business demand.

Employers say the benefits are obvious: limiting employees' hours amounts to limiting payroll costs. Using metrics like floor traffic and commission figures for sales staff, such software can help companies decide when -- or if -- to schedule people. Along with calibrating staffing levels to customer flow, employers also can limit overtime and generate cost savings as business conditions change. Although the technology can run into the hundreds of thousands of dollars for larger companies, smaller firms can turn to far cheaper "on-demand" scheduling options.

"A key way employers control their labor outlays is by keeping close watch on the number of hours assigned to workers," said Lambert, noting that 37 percent of retail jobs in the U.S. are now part-time. "One way they do this is by keeping headcount high. They keep lots of part-time workers on the schedule, but there aren't enough hours to spread around to make real jobs for employees."

As such practices have become common among larger retailers, including at stores like Juicy Couture, workers' schedules have grown increasingly erratic. Only 17 percent of retail employees have a set schedule, while 20 percent learn their working hours with no more than three days notice, according to a 2012 study by labor experts Stephanie Luce of City University of New York and Naoki Fujita of the Retail Action Project, an advocacy group for retail workers. Some 43 percent of these employees are on call, requiring them to phone their managers to find out if they are scheduled, sometimes with as little as two hours advance notice.

Fifth & Pacific said it requires managers to post schedules in advance and that it doesn't use on-call scheduling. But former employees say their hours were often changed without warning.

"They would change the schedule and wouldn't even communicate that," said Duane Davis, 26, who worked in the Fifth Avenue store's stock room at Juicy for four years before leaving in February and who recently worked with the Retail Action Project to start an online petition calling for fairer treatment of Juicy employees. "You'd show up and you weren't even working the schedule that you thought you were working."

Ex-Juicy Couture employee Duane Davis wants the retailer to give part-time workers more hours.
Retail Action Project

Davis added that employees would often take a picture of their schedules so they could document for managers when they had been scheduled to come in.

This is not unusual in retail, experts said. If customer traffic is slow, employees may be sent home upon arriving for work, or they might have to stay beyond their normal shift if business picks up. Workers may find themselves working a day shift one day and at night the next, while many are expected to be available seven days a week, according to an analysis of just-in-time scheduling by Demos.

As they struggle to maintain their shifting schedule, workers are often penalized for being late or because of other unplanned absences, such as doctor's visits.

"There's no predictability to their lives," said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union. "How do you arrange for child care if you don't know if you're going to be working? How do you arrange that if you want to go to school? How do you get a second job if you always have to be available?"

Fifth & Pacific said it uses scheduling software to guide staffing levels. But Lambert's research raises questions about whether customer demand varies as much as retailers claim. At most stores, 80 percent of staffing hours remain consistent from month to month, she has found. That suggests scheduling requirements are, by and large, highly predictable.

A fading brand

Still, Juicy Couture is no different than many retailers that seek to minimize labor costs by relying mostly on part-timers and by calibrating workers' hours to demand. But the unit's weak financial performance, coupled with the arrival of a new CEO in December, appears of late to have intensified its cost-cutting measures. 

When Fifth & Pacific, then called Liz Claiborne, bought Juicy in 2003, the brand was known mostly for its "casual luxury" line of velour hoodies and pants; today its products includes dresses, tops and other clothes along with accessories including handbags, watches and jewelry. Yet Juicy's designs failed to keep up with the times, and revenue has fallen sharply. The brand's sales sank 6 percent last year to $499 million, with net sales shrinking an additional 4 percent in the latest quarter. Overall, Fifth & Pacific lost $59 million in 2012, or 54 cents a share, on sales of $1.5 billion.

  • Alain Sherter On Twitter»

    Alain Sherter is an award-winning business journalist who has written for The Deal, MarketWatch and Thomson Financial Media.

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