According to Business Insider, more than 6,000 retail stores closed in 2017. Some of the stores, including Toys “R” Us, Payless Shoes, Gymboree and Rue 21, filed for bankruptcy. Others, such as The Limited and Radio Shack, simply shut down. Even Walmart, which seemed to convey positive news by giving its employees raises in early 2018, also eliminated thousands of jobs by shutting down hundreds of Sam's Club stores. Overall, retail was one of the biggest job losers in 2017—nationwide, retail employment fell by more than 36,000 jobs.

What accounts for this downward trend? Although many would quickly point to the convenience and ease of online shopping, we propose that there are other factors at work. Specifically, retail sector jobs, particularly retail sector jobs in New York state, are under threat from the aggregate effect of increasing government regulations.

Perhaps the most glaring example of increasing regulations in New York is the ever-increasing minimum wage. New York has dealt a particularly serious blow to restaurant employment by accelerating minimum wage increases for fast-food employees as compared to the general minimum wage increases for other employees. Although the basic minimum wage across most of New York state is currently $10.40 per hour, the minimum wage for fast food workers is significantly greater, at $11.75, and scheduled to increase at a much faster rate such that by 2021, the fast food minimum will be $2.50 more per our than the basic minimum upstate rate. This accelerated schedule places extra pressure on the retail restaurant industry, and incentivizes employers to find ways to reduce labor costs—often by eliminating jobs. Other recent regulatory burdens, such as New York's Paid Family Leave Act, present substantial new challenges to retail sector employers, particularly small employers, who now face losing employees for extended periods of paid leave time.

This regulatory trend only seems to be increasing: On Nov. 22, 2017, New York published new proposed call-in and scheduling pay regulations. The regulations, which were subject to a notice and comment period, are still in their introductory, proposed state. However, given New York's track record, retail employers should assume that the regulations will become final.

The proposed call-in regulations provide the following: (1) employees who report to work for a shift that was not scheduled at least 14 days in advance will be entitled to an additional two hours of call-in pay; (2) employees whose shifts are cancelled within 72 hours of the start of that shift will be entitled to at least four hours of call-in pay; (3) employees who are required to be on-call and available to report to work for any shift will be entitled to at least four hours of call-in pay; and (4) employees who are required to be in contact with their employer, within 72 hours of the start of a shift, to confirm whether or not to report to work for that shift will be entitled to four hours of call-in pay.

These new proposed regulations are complex, and are meant to target perceived abuses in the retail industry. In 2015, New York's Attorney General sent an inquiry to 13 major retailers operating in New York, asking for more information regarding their on-call practices. The next year, this action was followed by a joint inquiry from New York and several other states, leading to many retailers voluntarily changing their on-call practices. The proposed regulations, which grew out of these actions, began with scrutiny of the retail industry.

The fact is that the retail industry, more than any other, relies on last minute scheduling changes and on-call shifts to meet changing customer demands. For example, clothing stores often use on-call shifts, where employees must call in before the start of shift to see if they are needed. Whether or not the employee is needed often depends on the number of customers and volume of business in the store at the time of the shift, which is difficult to predict ahead of time. Furthermore, while the proposed regulations have an exemption for employees with weekly earnings at least 40 times the state minimum wage, this exemption will rarely, if ever, apply to retail workers, who often work part-time schedules at or barely above minimum wage. It is safe to predict that when the regulations become final, they will increase labor costs and force the retail industry to find new ways to reduce staff. The result of these additional regulations will lead to a decrease in retail jobs, both directly through fewer new hires to replace departing employees, and indirectly through the further automation of the workforce.

As technology advances, retail employers are able to decrease labor costs by automating. Perhaps you have experienced this, as the authors have. At one well-known fast-food chain, human wait staff has virtually been eliminated: Customers order and pay for their meals online or by using an in-store kiosk. In fact, the only human interaction involves instructing customers how to use the new kiosks and delivering completed orders.

This customer experience is increasingly common: In late 2013, Chili's and Applebee's announced that they were installing more than 100,000 tableside tablets at their restaurants across the country, allowing customers to order and pay their bills, without ever talking to wait staff. Buffalo Wild Wings, Panera Bread, Olive Garden and dozens of other restaurants have followed suit. This trend is set to continue: A report by the McKinsey Global Institute predicts that by 2030, as many as 80 million jobs could be lost to automation world-wide.

None of the protections that federal, state, and local governments have implemented to protect employees will have this desired effect, if the opportunity for entry level retail work continues to shrink due to automation, online vendors, and new technology. Although organized labor has been in the forefront of the “Fight for $15” battleground, it has done little in the past to thwart job eliminations prompted by automation. The National Labor Relations Board has not taken a clear position on whether or not unions have a right to be involved in the employer's decision to automate. Although automation that results in the elimination of jobs would appear to be a term and condition of employment, and thus a mandatory subject of bargaining, the Board has found that the decision to use “labor saving machinery” is a management prerogative not subject to collective bargaining. See Olean Gen. Hosp. & N.Y. State Nurses Ass'n, 2015 NLRB LEXIS 904 (N.L.R.B. 2015). This uncertainty may be resolved in the coming years: recently, the Teamsters have announced that they plan to fight the implementation of driverless cars and drone delivery at the collective bargaining table, and other unions will likely do the same. Any of these cases could end up before the Board and provide an opportunity to clarify the automation/collective bargaining issue.

Finally, it is important to recognize that retail sector jobs are often filled by some of New York's, and the country's, most vulnerable populations. Students, immigrants, refugees, and individuals with disabilities are heavily reliant on the retail sector to provide a steady source of employment. These individuals will be disproportionately affected by the decline in retail minimum wage jobs, leaving entry-level workers unable to gain necessary workplace experience. With the trends showing a decline in retail jobs nationwide, and New York poised to promulgate additional regulations in this already-burdened area, it is unlikely that employers will be incentivized to reverse the tide, leading to unintended social and economic consequences. For the time being, we may need to get used to the concept that, for minimum wage employers, “help” in the form of employees, is not wanted.

James Holahan is a member and Theresa Rusnak is an associate in the labor and employment practice at Bond, Schoeneck & King.