Retail: The quiet crisis

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NEW YORK (CNNMoney.com) -- There's a major American industry that lost 522,000 jobs last year and is on one of the longest sales losing streaks in its history.

But the retail industry's crisis isn't getting the kind of government attention being showered on the nation's automakers.

Monthly store sales have declined for six straight months. In the midst of the longest recession in decades, the industry has lost more than three times the 163,000 manufacturing jobs shed by the auto industry last year.

Marshal Cohen, chief retail analyst with NPD Group, said he's especially concerned about this significant erosion of retailing jobs.

Unlike with the auto industry, Cohen fears the issue of retail job losses either isn't getting its fair share of attention from Washington or keeps "getting swept under the rug."

"When the industry is losing 34,000 jobs every couple of weeks, you better pay attention," Cohen said. He was referring to Circuit City's announcement last week that the electronics retailer, which employs 34,000 people in the United States, was going out of business.

J.C. Penney (JCP, Fortune 500) CEO Mike Ullman, too, expressed his concerns about inadequate attention being paid to the accelerating pace of retail job cuts.

"Retailers are the largest group of private employers in the country," Ullman said during a panel discussion last week at the National Retail Federation's (NRF) annual convention in New York.

"We lost twice the number of workers last year than automakers and we hired 45% fewer holiday workers last year," he said. "If that doesn't (press) the point, I don't know what would."

Said Cohen, "Consumer spending at retailers fuels 75% of the economy. So you have to make sure these people have jobs.

"If not, the ramifications are so overarching that it's enough to put the economy in a tailspin," he said. "These people losing jobs are full-time workers, part-time workers, college kids, senior citizens. They aren't only employees. They are consumers and taxpayers too."

Scott Hoyt, senior director of consumer economics for Moody's Economy.com, said he doesn't have a "good answer" as to why the the retailing industry hasn't been as effective as other industries in highlighting the issue of escalating jobs losses.

"If we put it in perspective, although the number of actual jobs lost in retailing is much bigger, the percentage of the total is not as high as for the auto industry," Hoyt said.

The retailing sector employed 15 million Americans in 2008 versus 800,000 jobs in the U.S. auto manufacturing industry, according to the Labor Department.

But auto manufacturing jobs fell 16.9% last year while total retail jobs fell 3.2%.

Government data showed more than half of retail job losses came in the last four months of the year with the biggest cuts occurring among auto dealers, furniture stores, electronics and appliance sellers.

However, retailing was also the third biggest employer after the government and the services sector.

At the same time, retail jobs typically are lower-paying jobs, Hoyt said. "[Therefore] the amount of consumer spending power lost [from a retail job] is probably not as significant to the economy as a higher paying job," he said.

Still, he maintained that in this recession "any job is still better than no job."

Burt Flickinger, managing director with consulting firm Strategic Resources Group, argued that the retail industry is overstored and overemployed and perhaps has itself to blame for its recent woes.

What's more, Peter Capelli, director of the Wharton Center for Human Resources, said Washington has been more responsive to the turbulence in the auto industry for other reasons.

"Auto jobs and sales are being lost to foreign competitors," Capelli said. "This industry used to be 90% domestic. Less than half of it is now domestic. The retailing industry is largely domestic."

But perhaps the biggest difference between two industries - retail and auto - is union representation.

While 50% of the U.S. auto industry is unionized, the retail industry is largely anti-union. Industry watchers estimate that only about 6% of the retail industry has union representation.

"It's fairly clear about why retailers haven't been effective in highlighting the jobs issue. This is a non-union industry that lacks a strong lobbying voice in Washington," said Theresa Williams, director of the Center of Education & Research in Retailing at the Indiana University Kelley School of Business.

NPD's Cohen agreed with Williams.

"First, there is no single organization that is in the forefront speaking for [retail] employees," he said, adding that the NRF, the industry's largest trade group, has been ineffective on this front. "This industry has nothing in comparison to the prominence, exposure and connectivity to D.C. as does the auto industry."

For its part, the Retail, Wholesale and Department Store Union (RWDSU) said in a statement to CNNMoney.com Thursday that the issue of retail job losses "is bigger than retail sales and consumer spending."

"Tens of thousands of retail workers are left to wonder how they're going to pay for their homes, their health care and provide for their families," said Paul Karr with RWDSU

"Our union is working closely with retail workers to provide unemployment training to help folks navigate that system while they look for work. But more important than training are jobs," Karr said. "The only way to do that is to stimulate the economy and get money into people's hands."

NRF spokeswoman Ellen Davis agreed that retailers "collectively need to talk about not only what's happening to their sales but also their workers."

By its own estimates, the NRF maintains that the industry has more than 1.6 million retail establishments, employing more than 24 million workers.

"One in five American workers are employed in the retailing industry in full-time, part-time and seasonal jobs," Davis said. "This is a story that's not being told."

"We are watching the situation closely and we think the more than 500,000 jobs lost [last year] is just the tip of the iceberg," she said.

To her point, the International Council of Shopping Centers (ICSC) estimates that as many as 148,000 retail establishments - both public and private - will go out of business in 2009, possibly impacting more than 600,000 jobs in 2009.

Just this month, five more retail chains filed for bankruptcy, adding to the more than 27 retail chains that filed for bankruptcy - including some that eventually liquidated - in 2008.

"It used to be that if you lose a job at J.C. Penney, you could apply for a job at Macy's," Cohen said. "But that's not the case now."

Regarding Cohen's criticism of the NRF, Davis said the agency has "tried to be a voice on the [jobs] issue. But sometimes the conversation falls on deaf ears."

That's not good enough for Cohen. "Yes, the industry can absorb some of these store closures and job losses but you can't expect it to absorb the entire burden of the economy," he said.

While a "bailout" like the $700 billion Troubled Asset Relief Program for banks may not be feasible for retailers, Cohen said the industry still needs some kind of urgent assistance.

"We need to find a way to assist these store workers who have lost their jobs and get them back in the workforce," he said.