Climate change could mean big pay swings for 10% of U.S. workers

Climate change doesn't just threaten the environment — in the years to come it's also likely to worsen income inequality by cutting into the hours, and therefore the pay, of millions of retail workers, according to a new report from the Federal Reserve.

Increasingly volatile weather patterns could mean lower income for retail industry employees, who make up roughly 10% of the U.S. workforce, an analysis by Fed economist Brigitte Roth Tran found. That's because extreme temperatures, flooding, storms and other byproducts of global warming also affect patterns of consumer spending — and even whether they go to the store at all.

That trend is likely to become more dramatic as climate change worsens, Roth Tran noted. In turn, those shifts affect retail workers, who are given fewer work hours when sales decline and more when sales increase. 

"Individuals working in retail with sales-based pay or hourly wages may experience increasingly large income swings as weather becomes more variable and affects sales and hours worked," the economist wrote. "Understanding how climate change will affect the retail sector is an important component to quantifying and adapting to the effects of climate change and also to understanding its potential implications for economic inequality."

Low pay, unsteady hours

Retail is among the lowest-paying sectors, and employees often have little control over the number of hours they are scheduled to work. In August, the average hourly wage in the private sector was $23.59, while those in retail earned an average of $16.72 an hour, according to the Bureau of Labor Statistics. Retail employees worked an average of 30.4 hours in August, the BLS data showed, compared to 33.6 hours by private-sector workers overall.

In 2018, projections on the impact of Hurricane Florence had it costing retailers about $700 million, according to Planalytics, which offers weather-planning tools for businesses. That estimate of lost sales includes purchases that retailers and restaurants would miss and not make up, and came in addition to property and other damage caused by the hurricane.

Negating those losses somewhat would be increased sales at home-improvement retailers like Lowe's and Home Depot.