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Wholesale and Retail Trade in Southeast Minnesota

by Mark Schultz
mark.schultz@state.mn.us
August 2017

Wholesale and Retail Trade combined make up over 14 percent of the total jobs in the Southeast region - by no means a small share. In fact, these two sectors, two of the four sectors in the Trade, Transportation, and Utilities supersector, account for the third highest number of jobs in the region, behind Healthcare and Social Assistance and Manufacturing. In many respects this solidifies the importance of Wholesale and Retail Trade among all industries in the region. These two industries help support individuals and families by providing much-needed jobs as well as contribute to the overall economy of the region. But what is the difference between the two different types of sales? While ultimately both end in the procurement of goods by customers, Wholesale Trade is the antecedent to Retail Trade.

According to the Bureau of Labor Statistics (https://www.bls.gov), Wholesale Trade includes goods that come from many industries, including Agriculture, Mining, Production, and Information which are sold to other businesses. Wholesale traders commonly function in a warehouse setting with typically little, if any, display of merchandise. The location and layout of the warehouses are not designed for customers to shop. In contrast, retail stores that buy merchandise from wholesalers are equipped to handle customers and display merchandise as well as use advertising to attract business. A second sector of Retail Trade exists in the form of “non-store retailers” which tend to reach their customers through broadcasting such as infomercials and published advertising, both paper and electronically, mobile and stationary vending, and door-to-door sales and demonstration in customers’ homes.

Ebbs and Flows

Both Wholesale and Retail Trade have seen a series of ups and downs over the last 10 years when it comes to the number of jobs in the region. Both saw their peak employment early in the decade with Retail Trade peaking in 2007 with over 28,000 jobs and Wholesale Trade seeing the highest number of jobs in 2008 at 6,895. Since then both sectors saw decreases resulting in lows of 26,433 retail jobs in 2011 and 6,410 wholesale jobs in 2010, before beginning to increase again. And while there were another set of declines and growth throughout the remainder of the decade, both sectors never fully regained the number of jobs that were present in 2007. In fact, Retail Trade lost just over 800 jobs (2.8 percent) while Wholesale Trade saw a decline of 185 or 2.7 percent (see Figure 1).

 

 Figure 1. Wholesale and Retail Trade Employment Trends, 2007-2016

 

Southeast Minnesota (EDR 10) is not alone in the loss of jobs in both Wholesale and Retail Trade. It is actually one of four regions that experienced a dual loss – along with the Arrowhead (EDR 1), Southwest Central (EDR 6E), and the seven-county metro regions (EDR 11). Additionally, the state as a whole experienced a loss in both industry sectors. What is interesting is that the regions that lost jobs in both sectors are not concentrated in one area of the state, and according to DEED’s Local Area Unemployment Statistics data only one of these regions saw a decline in their labor force during this time – the Arrowhead region lost 4,076 members of their labor force. Additionally, the losses are not solely highest in one of the two sectors, as two regions saw higher losses in Retail Trade while the others experienced more losses in Wholesale Trade.

 

Table 1. Job Count Changes 2007-2016

Region

Wholesale Trade

Retail Trade

1-Northwest

1,233

402

2-Headwaters

82

-90

3-Arrowhead

-158

-753

4-West Central

391

219

5-North Central

4

-524

6E-Southwest Central

-95

-29

6W-Upper Minnesota Valley

127

36

7E-East Central

-125

48

7W-Central

115

177

8-Southwest

29

-566

9-South Central

-509

794

10-Southeast

-5

-1,107

11- 7-County Metro

-4,289

-2,521

Minnesota

-1,602

-3,581

Source: DEED Quarterly Census of Employment and Wages (QCEW)

 

A Slice of the Pie

The Wholesale and Retail Trade industry makes up just over 14 percent of the total jobs in the Southeast region. While Retail Trade accounts for the bulk of this percentage, representing 11.3 percent of the total, Wholesale Trade holds its own as 2.8 percent of all of the jobs in the region. Together, these two industry sectors are the third highest employing industry in the region. Interestingly, because of the much higher average weekly wages for Wholesale Trade jobs, the share of jobs compared to the share of total payroll isn’t as skewed as might be expected. To put this in perspective, the same number of retail jobs as there are wholesale jobs (6,710) would only equal $168,771,961 or roughly 1.5 percent of the total payroll.

Table 2. Industry Employment Statistics, 2016

Industry

Employment

Percent of Total Employment

Firms

Total Payroll

Percent of Total Payroll

Average Weekly Wage

Total, All Industries

240,681

100.0%

11,732

$11,549,583,475

100.0%

$923

Retail Trade

27,275

11.3%

1,687

$686,029,100

5.9%

$483

Wholesale Trade

6,710

2.8%

501

$408,063,367

3.5%

$1,169

Source: DEED Quarterly Census of Employment and Wages (QCEW)

 

DEED’s Employment Outlook data show that the Wholesale and Retail Trade industries are both expected to see growth from 2014 to 2024. Wholesale Trade is estimated to add 54 new jobs while Retail Trade is projected to grow by 842 jobs. As seen in Table 3 not all of the distinct subdivisions of Wholesale and Retail Trade are expected to see an increase in jobs, but overall the number of openings in those sectors in which growth is projected outnumber them.

Table 3. Industry Employment Projections 2014-2024

 

2014 Employment Estimates

2024 Projected Employment

Percent Change

Total Change

Wholesale Trade

7,119

7,173

0.7%

54

Merchant Wholesalers, Durable Goods

3,314

3,230

-2.5%

-84

Merchant Wholesalers, Nondurable Goods

3,193

3,443

7.8%

250

Electronic Markets and Agents/Brokers

612

500

-18.3%

-112

Retail Trade

26,762

27,604

3.1%

842

Motor Vehicle and Parts Dealers

3,184

3,385

6.3%

201

Furniture and Home Furnishings Stores

574

518

-9.7%

-56

Electronics and Appliance Stores

512

422

-17.5%

-90

Building Material and Garden Supply Stores

2,700

2,782

3.0%

82

Food and Beverage Stores

5,437

5,577

2.5%

140

Health and Personal Care Stores

1,053

1,042

-1.0%

-11

Gasoline Stations

3,036

3,436

13.1%

400

Clothing and Clothing Accessories Stores

1,779

1,849

3.9%

70

Sporting Goods/Hobby/Book/Music Stores

1,011

1,286

27.2%

275

General Merchandise Stores

5,679

5,611

-1.1%

-68

Miscellaneous Store Retailers

1,220

1,151

-5.6%

-69

Nonstore Retailers

577

545

-5.5%

-32

Source: DEED Employment Outlook

 

While it is pleasant to see a projected need for additional employees in Wholesale and Retail Trade in the Southeast region, a few less-than-desirable issues may come with these openings. First, as seen in Table 4, DEED’s Job Vacancy Survey shows that 89 percent of the current openings in Retail Trade are part-time and have relatively low median wage offers – current median wage offers rest at $10.97 per hour. In contrast, only 10 percent of the current vacancies in Wholesale Trade are part-time, but the wages for these vacancies are relatively low, sitting at $12.00 per hour. While the vacancy data seem to contradict the wage data reported above from the Quarterly Census of Employment and Wages shown in Table 1, the reason for this may be that the average weekly wage data from above are for workers covered by unemployment insurance while the vacancy data are not for workers, but show current openings for which workers are needed. Second, 66 percent of the vacancies in the Wholesale industry sector are temporary or seasonal, meaning that individuals who gain employment in these vacancies may find themselves unemployed for part of the year. In comparison, only 9 percent of the openings in Retail Trade are temporary or seasonal. Finally, relatively few of the openings in both Wholesale and Retail Trade in the region offer health insurance – only 27 percent in Wholesale and 14 percent in Retail.

Table 4. Job Vacancies and Characteristics

Industry Title

Vacancies

Vacancy Rate

Percent Part-Time

Percent Temp. or Seasonal

Percent Req. Post-Secondary Education

Percent Req. 1+ Yrs. Experience

Percent Req. Cert. or License

Median Wage Offer

Offers Health Care

Total, All Industries

8,347

3.5%

48%

8%

27%

34%

33%

$12.70

53%

Wholesale Trade

163

2.4%

10%

66%

10%

55%

3%

$12.00

27%

Retail Trade

1,063

3.9%

89%

9%

2%

12%

4%

$10.97

14%

Source: DEED Job Vacancy Survey (JVS)


Room to Grow or Let it Go?

As mentioned above, the Trade Industry makes up 14.1 percent of the total jobs in the region. However, this industry makes up 15.3 percent of the jobs in the state as a whole. Location quotients, which indicate the concentration of jobs in a specific area compared to the state, show that there are eight sectors within this industry that are more highly concentrated in the region than in the state, including vending machine operators, shoe stores, lawn and garden equipment and supplies stores, and gasoline stations, each having a location quotient greater than 1.5 (see Table 5). There were, however, also sectors that saw significantly lower concentrations than those of the state, including very low location quotients for electronic shopping and mail-order houses, wholesale electronic market, agents, and brokers, and professional and commercial equipment and supplies merchant wholesalers.

Table 5. Concentration of Regional Wholesale and Retail Trade Jobs

Industry Division

LQ

Top 8

Vending Machine Operators

2.95

Shoe Stores

2.00

Lawn and Garden Equipment and Supplies Stores

1.70

Gasoline Stations

1.56

Motor Vehicle and Parts and Supplies Merchant Wholesalers

1.30

Other General Merchandise Stores

1.30

Petroleum and Petroleum Products Merchant Wholesalers

1.29

Grocery Stores

1.27

Bottom 8

Machinery, Equipment and Supplies Merchant Wholesalers

0.63

Electronics and Appliance Stores

0.60

Used Merchandise Stores

0.58

Electrical and Electronic Goods Merchant Wholesalers

0.55

Lumber and Other Construction Materials Merchant Wholesalers

0.40

Electronic Shopping and Mail-Order Houses

0.34

Wholesale Electronic Markets, Agents and Brokers

0.20

Professional and Commercial Equip. and Supplies Merchant Wholesalers

0.11

Source: DEED Quarterly Census of Employment and Wages (QCEW)

 

The implications of this could be two-fold. There may be room to boost these areas with low concentration in the region given adequate growth opportunities, or it may be that there isn’t a sufficient demand for these sectors in the region so that efforts to support growth may be better utilized for other fields within Southeast industries.

Balancing positive and negative attributes, the Wholesale and Retail Trade industry sectors do not appear to be going anywhere in the future. Southeast Minnesota is currently experiencing a need for employees in these categories and is projected to continue to feel this demand in the future. While there appears to be a shift in some respects in the way people shop with the emergence and growth of online shopping options, Wholesale and Retail Trade will continue to be an essential element in the economic landscape in Southeast Minnesota.

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