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What the May jobs report says about the hospitality and leisure sector

WorkingNation President Jane Oates joins Yahoo Finance Live to discuss the May jobs report, labor market woes, and the outlook for wage growth.

Video Transcript

BRIAN SOZZI: Welcome back to Yahoo Finance Live. The jobs picture for service industries, such as hospitality and retail, continues to be murky at best. Joining us now for more on this is WorkingNation president Jane Oates. Jane, good to see you here. I want to zoom in on the retail jobs for the month of May. It declined 61,000. Help us understand why that might be the case.

JANE OATES: Well, I think it was a surprise to everybody. Most of those losses were in general merchandise stores, which I don't think people expected. So I think we'll be watching. I think in your last segment, you brought up what's the impact of automation. All of us see more and more self-checkouts in retail stores. And is that starting to have an impact? And have those retail outlets not had the time to pivot and train workers for better jobs in the industry?

BRAD SMITH: OK, and so we were discussing this with the Secretary of Labor Marty Walsh just a moment ago, and really upskilling the workforce for the future of engaging with that automation and ensuring that there are still jobs that go hand in hand with operations that we engage with on a day in, day out basis as consumers right now.

JANE OATES: Yeah, I think that's exactly right. I mean, so if you look at something like retail, in inventory management, somebody gets moved from a checkout clerk into data and-- a data analytics job in inventory management. That takes time, and it takes the employer investing in that employee to be able to have the skills to take that job.

I'm hoping that the loss we saw today is a one-time loss because, overall, retail has rebounded. They are significantly higher than they were in February of 2020, particularly because of grocery stores and the pivots there they made in terms of delivery and different methods to get goods to people. So I'm hoping that we'll see that turn around next month.

BRIAN SOZZI: How can employers, Jane, get folks into these jobs?

JANE OATES: You know, you are hitting the million dollar question. How do we get these people off the sidelines and decide to come back into work? Because the labor market participation rate is what alarms me. We still have too many people who were working in February of 2020 who haven't come back yet. And while we're still down 1.3 million jobs in leisure and hospitality, we have lots of really good jobs. Business and professional services is booming. Retail, again, as I said, is up. We need to get people back in and start rebuilding their work history.

BRAD SMITH: OK, well, there are a ton of jobs open right now. And I mean, based on the data that we've been continuing to track, if every person that's unemployed actually went out and wanted to get two jobs, that's a possibility. And so, what is the re-engagement campaign? What does that need to look like among companies, and even more broadly, from a policy perspective?

JANE OATES: Yeah, honestly, I think we have to teach people how to really articulate their skills, particularly transferable skills. So say, I was in one sector and really want to get into another. We've seen lots of job loss in, for instance, long-term care facilities. But people who did management and administration in long-term care facilities have terrific skills that they could move into growing industries, like business and professional services. So we have to use the public workforce system to really help them articulate those skills and see themselves basically as employable in great, good jobs in other sectors. Not easy.

BRIAN SOZZI: Not easy. And Jane, we were just talking about the retail jobs decline, but let's look at it another way. Is it just that sales are starting to slow down at retailers, and they are cutting back on employment and preparing for a recession?

JANE OATES: You know, this recession scare is really out there, both with individual people, who, I think, are starting to pack away a little more savings, and with businesses. They don't want to overhire in case business drops drastically. But I don't understand that in retail because we're coming up to back to school, and you would think that people wouldn't want to let good employees go, so I'm a little puzzled by that loss this month still.

BRAD SMITH: What's the reality of wages in the future? Even if we do-- if we are staring down some of the recessionary signals or pre-recessionary signals, and we do see some of these hiring freezes start to get instituted, that creates even more of the competition among employees to get into the jobs that are currently open, are still being hired for, in order to see some of that wage growth for themselves.

JANE OATES: Yeah, I think that's right. Look, I think the one positive thing of a horrible pandemic recession is that people really have seen the value of credentials. They want-- if they-- they have really, to me, finally woken up to the fact that in order to get a better job, you have to have more or different skills. So all these ideas about getting credentials online, stackable credentials, figuring out how to continue to grow as you're a mid-career worker, it's not done.

So I think that people are going to continue to have those discussions with their employer. It's going to be really interesting for all of us to watch the increase, I hope, in the take-up when employers offer education as a benefit. That number was very low pre-pandemic, single digit for years, 7%, 8%. If we can get that number really to where I think it should be, 20% or 30% of the people taking advantage of education as a benefit, those employees that are lucky enough to get it, that's going to push other employers to offer it.

So it's not just going to be the big employers anymore. It's going to be mid-sized and smaller employers who can say, I can get that $5,250 tax credit. I'm going to give you that as an education benefit. I think that's going to be good for individuals, great for business, and terrific for our economy.

BRIAN SOZZI: Well, good thing Brad and I graduated from TV anchor school about 10 years ago. All right, Jane Oates, WorkingNation president, always good to see you. Have a great weekend.

JANE OATES: Great to see you. Thanks