2025 Inside Employees’ Minds report in retail and hospitality 

The retail and hospitality industries are facing a workforce crisis. For years, frontline jobs in these sectors have been seen as stepping-stones, temporary roles on a career journey. But the labor market shifts of recent years have altered this perception, forcing employers to confront the essential value of these roles. Retail, hospitality, and food service workers have also recognized their worth and are demanding the same financial stability, flexibility, and career growth opportunities enjoyed by their peers in salaried roles.

Yet, rather than move forward to meet workers’ needs, many employers are headed in the opposite direction, retreating to outdated, pre-pandemic practices. As headlines about the talent crunch fade, pay rates are eroding, flexibility disappearing, and employee engagement efforts stalling.

This short-term thinking signals a return to treating retail, hospitality, and food service workers as disposable — to be discarded on the road to economic recovery. It not only jeopardizes the future of the retail workforce but also places a heavier burden on broader economic systems, as displaced workers may seek public support to fill the gaps left by insufficient pay and benefits.

​​It also puts employers at risk of losing not only their succession pipeline but the participation of hourly employees, who—seeing they have no real career prospects or retirement savings—may well decide to leave the industry entirely for alternative paths and better paychecks.

Mercer’s 2024 Inside Employees’ Minds report highlights the consequences of this disconnect: undervalued workers who are frustrated and ready to leave. This article explores the challenges employers face, the risks of inaction, and strategies for rebuilding trust and resilience among their workforces.

Our Inside Employees’ Minds 2024-2025 research shows hourly retail and hospitality workers navigating a fragile financial and career ecosystem. Beneath the surface of economic recovery lies a workforce grappling with stagnant pay, limited flexibility, and tenuous career prospects. Workplace relationships are strained, and leadership development is lacking. Without meaningful change, this workforce is increasingly poised to leave.

Here are some of the core challenges and opportunities to stabilize and empower this critical labor force that came from this research:

Pay and benefits are falling behind

Hourly retail workers continue to feel undervalued. Retail hourly workers feel undervalued, with a 23 point gap  in perceived pay satisfaction compared to their salaried colleagues—the largest disparity across all industries in the study. These roles, essential to the customer experience, are often neglected in compensation and benefits.

• Only 58% of retail hourly workers believe their benefits are competitive—a 9-point decline from 2023 and 14 points below their salaried peers.
• Healthcare affordability is a growing issue, with hourly workers rating their ability to manage expenses 11 points lower than in other industries.
• Retirement preparedness is bleak: just 28% feel confident they can turn their savings into sustainable income—12 points lower than workers in other industries.
• Retail hourly workers are 11 points below all other industries in their confidence that their organization is doing enough to help them prepare for retirement.

These trends paint a picture of a financially strained workforce. Without immediate action to close these gaps, the long-term sustainability of the workforce—and by extension, the industry—faces critical risks. Employers must decide whether to invest in their workers today or risk shifting the burden to taxpayers tomorrow.

Rigid scheduling is fueling burnout

Hourly workers are not asking for extravagant perks—they want predictable schedules and the ability to manage their personal responsibilities. Yet, inflexible scheduling and chronic understaffing dominate the industry, leaving workers overwhelmed.

Only 59% of retail hourly employees are satisfied with their flexible work options, and they scored the lowest among all industries in the study stating only 74% believe they can maintain a reasonable work-life balance—which is 4 points lower than any other industry segments studied.  

These figures reflect a workforce that is running on empty. Rigid scheduling doesn’t just inconvenience workers—it drives them to exhaustion, creating a cycle of burnout that the industry cannot afford to perpetuate. 

To prevent further attrition, employers must move beyond surface-level promises and implement real scheduling reforms.

Career development lacks direction

Many hourly retail workers also lack a clear path for career progression. According to the study, while they understand the immediate skills required for their roles, long-term growth feels unattainable.

Only half of retail hourly workers believe their career goals can be met at their current company—a disheartening 4-point drop from previous years and 12 points  lower than in all other industries. Additionally, retail workers feel left behind in technology support, with hourly retail workers were 11 points lower in agreeing their organizations provide the tools to improve their efficiency.

Without investment in career development, the industry risks losing a critical pipeline of future leaders.

Strained relationships and insufficient manager training 

Managers are often the core of workplace culture, yet many are thrust into leadership roles without adequate preparation. Stress tied to workplace dynamics has jumped by 24% since 2022  for retail hourly workers. Only 73% feel a sense of belonging within their teams, compared to 82% of salaried peers.

Managers are not just team leaders; they are the linchpins of operational success. Investing in their technical and interpersonal development is critical to creating cohesive teams and retaining top talent. Without this, workplace tensions and turnover will only escalate.

Investing in leadership training—focusing on both technical and interpersonal skills—can strengthen workplace dynamics and improve team cohesion. Preparing today’s workers for leadership roles will not only enhance retention but also create a stronger foundation for the future.

The retention crisis: disposable jobs, disposable workers

Frontline roles in retail and hospitality are often treated as a disposable, limitless resource. Workers, in turn, treat these roles the same way—seeing the jobs as temporary placeholders. 

While only 27% of retail hourly workers are actively looking for a career change (8 points lower than 2023), other indicators suggest deeper dissatisfaction. Engagement has dropped to 65%, tying with manufacturing for the lowest across industries. Moreover, willingness to recommend their companies as good places to work is 7 points lower for hourly retail employees.

Employers who continue to focus solely on short-term goals risk losing valuable employees to industries offering better pay, flexibility, and growth opportunities.

Retail and hospitality employers face a pivotal moment. To rebuild trust and strengthen their workforce, they must move from short-term fixes to long-term strategies.

By addressing these challenges, employers can not only mitigate the current labor crisis but also build a resilient workforce for the future.

The employer opportunity: A strategic reset for the hourly workforce

Retail and hospitality hourly workers have recognized their value and are demanding better pay, flexibility, and opportunities for growth. While many workers are not actively looking to leave, they also see no path for growth. Without change, these employees are likely to leave the industry—or the workforce—entirely. Employers must recognize that treating frontline hourly roles as disposable is no longer viable for business performance.

The long-term rewards of this approach far outweigh the short-term costs. Without meaningful investments in pay, flexibility, and career development, employers risk losing their frontline talent to other industries.

For employers, the choice is clear: invest in workers, or risk losing them. For more insights and strategies to build a future-ready workforce, explore Mercer’s Inside Employees’ Minds 2024 report.