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As Retail Reopens, Los Angeles Businesses Struggle to Find Workers

While Los Angeles saw a long-awaited end to social distancing guidelines and mask requirements last week, the county is far from resuming business as usual.

That’s because L.A. still outpaces the rest of the country when it comes to joblessness, with 11.7 percent of its workforce unemployed as of late April. That’s nearly double the 6.1 percent national average, according to California’s Employment Development Department (EDD).

Governor Gavin Newsom said in late May that the state leads in job creation, having added 101,800 jobs this spring that account for 38 percent of all new jobs in the U.S. But employers are facing major roadblocks when it comes to bringing in talent, from sales associates to garment workers and warehouse employees.

Between March and April, trade, transportation and utilities—including warehouse jobs—declined at a greater rate than any sector in L.A., seeing 4,500 job losses, EDD said. Retail employment took a 1,200-job hit, while wholesale roles dipped by 800. California currently accounts for the second-highest unemployment rate nationally at 8.3 percent, and only about half of those who lost jobs during the pandemic have since returned to work.

Now, retailers and manufacturers are attempting to ramp up their operations in time to meet pent-up summertime demand. But the federal government’s Covid relief efforts—which augmented state unemployment insurance benefits during the pandemic—may be hindering prospective employers from recruiting low-wage workers.

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Beginning March 29 of last year, workers rendered jobless due to Covid-related circumstances became eligible to receive an extra emergency payment of $600 each week on top of their state-mandated unemployment insurance. While those federal emergency funds lapsed after July, officials added a new $300 weekly pandemic relief stipend to the baseline weekly benefits in December. That added assistance is set to expire in California in September, and some unemployed residents have opted to forgo finding work until the funds run out.

This is despite California offering the highest minimum wage nationwide. As of Jan. 1, businesses with 26 or more employees must pay at least $14 per hour, while those with 25 or fewer workers are required to pay $13. In Los Angeles, the numbers are higher. Businesses employing 26 or more staff must pay a minimum wage of $15, while those with 25 and fewer workers must currently meet a threshold of $14.25 per hour. Beginning July 1, all businesses in L.A. County will be required to pay $15 per hour.

Despite rising wages, businesses are having a hard time going up against EDD benefits, according to Sanjeev Bahl, founder of denim manufacturer Saitex, which recently opened its first U.S. facility in Vernon, just east of Downtown L.A.’s fashion district.

While attempting to fill remaining gaps in his factory staff after opening Saitex’s doors in 2020, Bahl has noted ambivalence among some workers who believe that remaining on unemployment insurance until it expires is the best choice for themselves and their families. Others have requested higher hourly wages of up to $20 per hour, he said, though the going rate for certain positions is closer to minimum wage.

Bahl said he believes some have declined full-time positions in order to continue to receive EDD benefits, while rounding out their income with supplementary, and likely undocumented, work. Garment manufacturers across L.A. continue to perpetuate the controversial piece-rate, rather than hourly, model for compensation, and often pay workers under the table. The practice, currently targeted by the Garment Worker Protection Act winding its way through California’s legislature, has been fingered for allowing bad actors to perpetuate unsafe factory conditions and withhold wages, since workers have little recourse.

Bahl has advised interviewees not to regard his employment offers “in a myopic manner” and miss out on desirable jobs that may not be available come fall, when competition will undoubtedly be on the rise. “I tell them, ‘We are trying to build a premium manufacturer and we need people like you,’” he said. “’So get into the system early, and in advance, instead of waiting it out.’”

While Bahl said many Saitex workers make between $16-$18 per hour, roles in retail stores remain closer to the lowest end of the spectrum when it comes to pay. At Gap Inc.—which has listed about 95 store positions across its Gap, Athleta, Old Navy and Banana Republic brands in the L.A. area—sales associates make an average of $11 per hour nationally, according to Glassdoor data. Urban Outfitters and Anthropologie have 38 store positions listed within 25 miles of Los Angeles, with average hourly wages around $12 in the U.S. Nordstrom’s national average pay for sales associates is $15 per hour, the site said.

Even taking into account L.A.’s minimum-wage increase, the countrywide figures illuminate mainstream brands’ and retailers’ propensity to meet, not exceed, their responsibility to workers. While service industry employees working in restaurants and bars furnish most of their incomes on tips from patrons, greatly supplementing their hourly compensation, commissioned sales jobs at mainstream retail are increasingly less common—and less lucrative. Retail shutdowns, which impacted boutiques, brand-owned retail and department stores in equal measure throughout 2020, likely contributed to the instability felt by the sector’s workforce, while continued uncertainty about public health and the economy could be partially responsible for today’s dearth of enthusiastic talent.

“It has been somewhat challenging to get folks to apply to opportunities that are coming up,” noted Lisa Salazar, director of workforce development and economic opportunity at Los Angeles Mayor Garcetti’s office. There appear to be “three main barriers or challenges” impacting the process of rebuilding L.A.’s workforce, she added.

For one, many residents are still uncomfortable resuming normal daily routines due to lingering Covid safety concerns, Salazar pointed out. As recently as January, city hospitals were full and infection rates had surged once again to the worst in the country. What’s more, most working parents are still challenged by the limited availability of childcare. With school out for summer, kids who have been learning remotely for the past year are now unoccupied as well as unsupervised by teachers. “And number three: I also think there may be some delay in getting folks back to work until the current unemployment benefits run out,” Salazar added.

The Mayor’s office has noted the county’s sluggish employment numbers and identified these issues as the primary areas of concern for middle-skilled unemployed workers, she said. While City Council’s prime objective in recent months has been a targeted vaccination campaign, Salazar believes a pivot toward pushing workforce reentry is due—especially amid retail’s official reopening, without restrictions, on Tuesday.

“I think after reopening day, maybe in the next week or two, we’ll start to see a significant shift where life resumes and people go back to work,” she said. “It’s hard to say, as we’ve never been in this situation before, but maybe by the end of June we’ll see an uptick” in the search for work. Prospective employees may be bolstered by a surge in consumer confidence at retail and restaurants, leading them to seek out service roles.

At the height of the pandemic, Salazar said she fielded “foot-tall stacks of WARN layoff notices” from businesses across the county that were forced to make devastating cuts to their workforces. But even amid those rampant layoffs, employers that needed workers still had trouble connecting with candidates. Last spring, the Mayor’s office set up a job portal housed on to match workers with businesses looking for help, she said. “Anytime an employer comes to makes us aware of this problem where they have opportunities and not enough applicants, the jobs portal is where we’ll post,” she said.

Prospective employees can also visit one of the city’s six Worksource Centers, which provide upskilling and resume building opportunities, phone and computer workshops, employment referrals and customized job matching, and career guidance and placement assistance, in person or online.

The Mayor’s office will likely underscore messaging about the importance of workforce reintegration in reopening the economy over the coming weeks, Salazar said. When it comes to the county’s small businesses, the emphasis this spring has been on “providing them with the support they need to open their doors,” she added. Colleague Leila Lee, associate director of community business in the Mayor’s Office of Economic Development, detailed City Council’s new budget, which has recently devoted more than $50 million to SMB support.

Ultimately, both public policy and efforts by private employers will play a role in bringing back L.A.’s workers. “There needs to be more public awareness around when the benefits are going to run out, and an amplification of opportunities that are available now,” Salazar said. If, however, the bulk of L.A.’s unemployed workforce decides to run down the clock on their unemployment insurance, “there could be a mad rush of people applying for a finite number of opportunities” this fall, she added.