Can a Living Wage Save America’s Malls?
When Elyse Wegeler worked at mall retailer Charlotte Russe for $7.40 an hour, she wouldn’t receive her work schedule until the week before, and it could change—often without notice—at any time. The college student in Allendale, Michigan, was expected to purchase and wear cheap, uncomfortable clothes like the ones the store sold, and the work was high stress, requiring tenacity and sales goals without the matching commission. Her story is like those of many other mall workers.
“We were really pressured into getting into customers’ faces to try to figure out what they wanted so we could sell it to them,” Wegeler said. “In the end, I wasn’t happy about my pay and moved on to be a waitress for much more money.”
Charlotte Russe, Wet Seal, and any number of cheap mall retailers have a history of paying low wages for high-stress jobs pushing their wares, and the tide of discontent among these workers is growing louder at a time when malls are struggling to keep the Muzak on. About 60 malls are on the brink of closing their doors, and more than two dozen have closed since 2010, according to real estate experts at Green Street Advisors.
Wall Street analysts are quick to place the blame on a combination of online shopping, increased competition in the teen apparel industry, and lack of foot traffic in malls. Yet, online retail makes up only 10 percent of sales, and clothing retailers take a smaller percentage of these sales than big-box consumer electronics or home-goods stores do. People still want to try on clothes in a store, knocking out the online retail theory.
Analysts have failed to properly take into account employee satisfaction and pay. Those things help create a sense of community, suggests Hilary Klein of workers’ rights group Make the Road New York, and that may be the key difference between a thriving retail space and a dying one, because community factors into foot traffic and where people want to be.
“When malls started, the reason people went to them was to be with other people in a community space, to hang out,” Klein said. Being able to shop conveniently was the bonus.
But if wages stay low, employees speak out brazenly against harsh working conditions, and the money stays with the suburban big-box retailers, the mall no longer seems like that fun place to hang out, she said. Klein’s group campaigned for a citywide living wage last year, and Mayor Bill de Blasio raised the city’s minimum hourly wage to $13.13 through an executive order last September.
“The best way to get money into the economy is to put it in people’s pockets,” Klein said. “They’re likely to spend it on restaurants, the movies, and shopping in the community. In cities that have a higher living wage, everyone said the sky was going to fall, but that has never happened. Economically speaking, they’ve been very healthy.”
On the other hand, increased competition and low foot traffic are both possible culprits in Wet Seal’s failings. But they may also be directly related to employee wages and treatment.
The now-famous sign posted in the Wet Seal window of Northgate Mall in Seattle has framed the company as heartless, giving employees no advance notice of store closings, withholding paychecks, and giving its CEO a hefty raise while lowly managers and associates struggled. The employees who posted the sign were quickly fired, and Wet Seal has decided to shutter 66 percent of its stores, laying off 3,700 full- and part-time workers.
If you look at the employee wages of Wet Seal’s most successful competitors, there’s a stark, multiple-dollar difference. According to Glassdoor.com, some Wet Seal managers make salaries at the $45,000 level, but most still have an hourly range of $12–$14 per hour, with sales associates starting around $8.
Compare this with H&M, the Swedish retailer that employs more than 115,000 people around the world. From overseas textile workers to store associates, H&M insists on paying its employees “living wages,” with a salesperson's starting rate of around $11.50 and the guarantee of more set schedules. While other clothing retailers are betting on the growth of online sales, H&M has been pushing more money into developing its stores, meaning a solid mall anchor along with happy employees who can afford to put some of that extra money back into the community, and maybe into a new H&M wardrobe.
If Wegeler had been hired at an H&M for her 15 hours a week, she would have had an extra $3,000 to spend every year, before taxes. That may not seem like much, but it’s the difference between affording a semester of college or not, and education always enriches a community.
Klein cites another big mall retailer in New York City, Macy’s, as an example of a living-wage success. Macy’s allowed its employees to unionize and collectively bargain, and they get set schedules and paid time off. Macy’s has stayed busy and profitable, even with higher wages, and it’s been serving the community with an increased presence in charitable donations and events, giving away $73 million in 2014.
Macy’s CEO Terry J. Lundgren is one of a new breed of successful retail leaders—including Karl-Johan Persson of H&M and Kip Tindell of The Container Store—to invoke the paradigm of “conscious capitalism,” which dictates living wages, community benefits, and sustainability. All three brands have millions and billions in profits and are viewed positively as mall and retail anchors, but they’ve also got good press and employees speaking out on their behalf, something Wet Seal lacked.
While stores such as Wet Seal and Charlotte Russe may stick to low wages and employee dissatisfaction, the future may be brightening for mall miniskirt slingers. Conscious capitalist Tindell, who started The Container Store in 1978 and has seen his business boom while treating workers well, just took over the National Retail Federation, the trade group for American retail owners. He’s vowed to get the NRF on board with living wages. If he succeeds, it could mean more brands focused on customer service and beefing up their physical stores, and more money going into malls and the community.
That would mean a second act for America’s malls instead of curtains.