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Retail Jobs Decline Hits Rural America Hardest

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Amazon and other ecommerce companies are thriving while brick-and-mortar retail stores are struggling. This nationwide trend affects every part of America, but, according to Indeed research, small metropolitan and rural areas are getting hit hardest.

As far as retail jobs are concerned, the rural/urban split is stark. Retail job gains have lagged overall job growth in urban counties of large metropolitan areas, but such jobs are actually declining in rural counties and small metros. Retail jobs fell 1.1% year-over-year in rural America in the quarter ending in June 2017–even as these jobs were still growing nationwide.

Meanwhile, ecommerce and warehousing jobs are growing robustly in most areas. What’s more, the boom in warehousing jobs is remarkably consistent in both rural and urban areas. Still, this does little to soften the blow from the retail decline in rural America because warehousing jobs represent a tiny portion of overall employment. The drop in retail jobs is just too much to overcome.

First, some important context: Retail employment began shrinking nationwide in July 2017 and, by November, jobs in the sector were down 0.1% year-over-year. To dig deeper, we analyzed county-level changes in employment and categorized counties along a rural/urban spectrum, as shown in the chart. Overall job growth, which includes employment in all sectors of the economy, is a helpful benchmark to examine these changes. Low-density suburbs in large metros posted 2.6% overall job growth through the second quarter of 2017, the strongest year-over-year gain among our county categories. Rural counties had the slowest overall job growth, at 0.4%.


The retail sector performed much more poorly, with job growth stagnant at best. Retail jobs declined 1.1% year-over-year in rural America through the quarter ending in June 2017. They fell 0.7% in small metros and eked out a 1.3% gain in low-density suburbs, where retail job performance was strongest.

By contrast, ecommerce and warehousing jobs have been growing strongly for the most part. In low-density suburbs, ecommerce employment surged 32% year-over-year. Meanwhile, warehousing jobs rose 12% in high-density suburbs. Even in rural areas, ecommerce and warehousing jobs expanded 7% and 12% respectively. In sum, the rise of Amazon and other online sellers and the crippling of brick-and-mortar retail is not spread out evenly across the country.

Similar research by the Federal Reserve Bank of New York confirms this picture. It showed that, between 2012 and 2016, department store jobs, a subset of all retail jobs, dropped in about 75% of counties studied. Meanwhile, a majority of those counties saw growth in ecommerce, that is, nonstore jobs. Combining department store and nonstore retailers, net jobs fell in about 80 percent of counties.

Ecommerce a small fraction of rural jobs

Rural America’s retail problem may be even greater than it appears at first glance. Although ecommerce jobs are growing robustly in small metros and rural counties, those jobs make up a very small share of overall employment. In small metros and rural counties, ecommerce jobs are a negligible share of all jobs–about 0.04 and 0.01% respectively.

These fast-growing jobs are many times more prevalent in urban counties of large metros, where they constitute 0.2% of all jobs. Warehousing too is a drop in the bucket, at around 0.4% of all jobs in low-density suburbs and mid-size metros, but only 0.2% and 0.1% of jobs in small metros and rural counties respectively.

The real problem is that rural counties depend more on jobs in retail–the contracting industry– than other counties. Retail is still 6.2% of employment in rural areas, a significant share. By contrast, in the most densely populated counties, retail makes up a smaller 4.6% of all jobs.

What it means is that the job market in rural America is shifting as a result of the twin phenomena of contracting retail jobs and booming ecommerce and warehousing jobs. Retail positions make up a relatively high percentage of jobs in rural America–and these areas already have relatively high unemployment rates. They will be hit harder still if more of those jobs disappear. And, even if a boom in ecommerce and warehousing jobs materializes in rural areas, it will matter less because there are fewer of those jobs in the first place.


Methodology
To analyze county-level changes in retail, warehousing and ecommerce jobs, we used the Quarterly Census of Employment and Wages (QCEW). One limitation is that QCEW data is lagged and is only available through the second quarter of 2017. It misses the more recent dramatic declines in retail employment seen in the monthly jobs report using Current Employment Statistics data. To analyze the rural/urban split, we used the taxonomy created by Indeed’s Chief Economist Jed Kolko to split the roughly 3,000 US counties into six density categories ranging from urban counties in large metropolitan areas to nonmetropolitan, or rural, counties.

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