Wal-Mart’s fear of commitment

By Rebecca Smith
July 12, 2013

Wal-Mart distribution center in Bentonville, Arkansas June 6, 2013. REUTERS/Rick Wilking

“Seeking an energetic person willing to drop everything when I call. Must be available 24/7, although I will make no long-term commitment to you.”

If this were a personal ad, we’d assume the writer would stay single forever. But this is essentially the help-wanted ad that Wal-Mart and other retailers are posting these days.

Retail workers who don’t have the benefit of a union contract are all too familiar with low pay, erratic part-time schedules and job insecurity. But industry standards sunk to a new low earlier this month, when Reuters reported that Wal-Mart Stores, Inc. has been hiring only temporary workers at many of its U.S. stores.

These temporary workers must reapply for their jobs after 180 days. Meanwhile, existing full-time employees are seeing their hours cut to part-time, resulting in understaffed stores with long lines and un-stocked shelves.

Wages are low — roughly $10 per hour — and the part-time work schedules are irregular and unpredictable. Temporary part-time workers can’t make plans of any kind — for their weekends or their futures.

There’s no time to create satisfying relationships with co-workers or customers, the things that make work enjoyable. No way to organize a union, as Wal-Mart is virulently anti-union. And no opportunity to work their way up. Instead, they work their way out, and on to the unemployment rolls.

Of course, retailers commonly hire temporary workers during the holiday season. But it’s not clear why Wal-Mart would choose a strategy of hiring temps in mid-summer. Or is it?

Wal-Mart insists that putting workers on temporary contracts is not a cost-cutting move. In particular, it contends that this practice has nothing to do with the Affordable Care Act, set to take effect in January 2014. But surely, Wal-Mart must know that the healthcare law allows companies to delay health coverage for up to a year while they determine whether or not an employee working less than full-time must be offered benefits.

Wal-Mart is notorious for low wages, bad labor practices and shifting costs to taxpayers. Wal-Mart’s wages and benefits are so low that many employees are forced to turn to the government for aid and emergency rooms for healthcare, costing taxpayers between $900,000 and $1.75 million per year per store, according to a recent report analyzing data from Wisconsin’s Medicaid program. According to that report, taxpayers already pick up a tab totaling $5,815 per Walmart employee.

This new temp-worker-only scheme could generate a seismic shift in retail jobs beyond Wal-Mart’s empire. As the nation’s largest employer, Wal-Mart has the power to exert enormous downward pressure on the entire retail industry, where median annual wages are under $21,000. 

One study found that each new Wal-Mart lowers the average hourly wage of retail workers in the surrounding state by two-tenths of a percent. That translates into a 10 percent average wage reduction in states with 50 Wal-Mart stores.

As more and more states are carpeted with Wal-Mart stores, local retailers and grocers and their workers get squeezed.

Retail is projected as the second-largest growth job in the country between now and 2020. Retail jobs need to be improved — not downgraded — for the good of both retail sales workers and our economy.

Workers who have money in their pockets can buy things. Since consumer spending accounts for some 70 percent of our national gross domestic product, good jobs create a virtuous cycle of more sales, the need for more employees and revenues to support better wages.

If we want to build a real, sustainable economy for all of us, we have to raise pay and create job security and good benefits in the industries fueling job growth.

We can reward work. We can save taxpayer dollars. We can create new consumers and grow our economy. But it will require employers like Wal-Mart to let go of their poverty-wage, part-time temp worker schemes — and get over their fear of commitment.

 

PHOTO (Insert A): Employees of Wal-Mart Stores, Inc. leave the U.S. associates meeting with a giant portrait of company founder Sam Walton hanging in the background, in Fayetteville, Arkansas, June 5, 2013. REUTERS/Rick Wilking

PHOTO (Insert B): A man holds a sign during a protest for striking Wal-Mart employees at a store on Black Friday in Paramount, California, Nov. 23, 2012.  REUTERS/Bret Hartman

 

323 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Brick and mortar retail is feeling the huge pressure of the internet sales. There is no way but down.

And until all the low wage manufacturing in China is not getting more expensive, the domestic retail “low” pay job is still much better than no job at all.

Posted by robb1 | Report as abusive

Like it or not, Walmart is playing by today’s rules…better than anyone else. They have no obligation, moral or otherwise, to do differently until or unless applicable laws and incentives are changed legislatively.

It is our legislatures that “lead” in this country by establishing and enforcing the rules. When the results are not what is desired, it is the legislatures that are responsible for necessary changes.

My wife and I must get by on predominately our Social Security income (which Congress seems hell bent on reducing in purchasing power in future years. Without Walmart that simply would not be an option, so we appreciate them as loyal customers.

Posted by OneOfTheSheep | Report as abusive

My name is Kory Lundberg, with Walmart’s communications team. This piece is so filled with errors; I thought it was important to provide the correct information.

First and foremost, nearly a quarter of our one million hourly store associates have been with Walmart for 10 years or more – that’s more associates than the total work force for most companies. And is the exact opposite of what Ms. Smith incorrectly claims about our associates.

Another example, our full and part time associates are receiving more hours than they were at the beginning of the year – an average of three more hours per a week. This is something we have been very intentional about and a response to what we are hearing from our associates. We have been able to do this, in part, through our flex associates. This group of associates helps ensure our stores are properly staffed when we’re busiest. They’re assigned to the shifts available after the full-time and fixed part-time associates receive their hours and they know what their schedule is three weeks in advance. We are very clear with this group from the beginning that their hours could fluctuate from week to week to help ensure consistent scheduling for our full and part time associates.

It’s also important to know that we’re hiring for all roles in our stores – we currently have more than 25,000 full and fixed part-time job openings in our stores.

We know there are many misconceptions about our company. But the facts show Walmart’s commitment to helping our associates and our customers build better lives for themselves and their families. That’s what the real Walmart is all about.

Posted by KoryLundberg | Report as abusive

Kory: A couple of questions. I understand associates might know their schedules 2 or 3 weeks in advance. Flexible scheduling may make sense for many. However, many accept flexible scheduling as a depressed labor market may create little alternative for employees, whether real or perceived. It’s my understanding (correct me if I am wrong) that Walmart intends to increasingly rely on part-time staffing. One impact of flexible scheduling is that part time employees find it difficult or impossible to hold or even pursue a second job, thus keeping them – and potentially their families – at or near poverty level, consider what is now becoming the prevailing low $10 – $13 per hour wage. There is some evidence that this scheduling practice will become the industry standard as retailers respond to such competitive pressures in kind. If this is where the labor market is headed, I see a corresponding and continuing erosion of customer purchasing power. I’m sure you are aware of just how much Walmart represents of consumer purchases nationally. I’m also sure you are aware of the over-representation of Walmart employees receiving some form of public or charitable subsidy or other assistance to meet basic living expenses. If such scheduling and pay practices broaden nationally, what will be the eventual result for Walmart sales? How will Walmart sustain momentum domestically? Or will it shift expansion efforts overseas? If I recall correctly, Walmart has of late seen lackluster sales numbers. What’s the long term plan when Joe and Joan associates everywhere are at or near poverty and if and when even middle-skill wages are driven down by the low base wage? What are your forecasts for your long-term customer base?

Posted by Heyoka | Report as abusive

Thank you Kory Lundberg for explaining Wal-Mart’s practices accurately. I am not, nor ever have been a Wal-Mart employee or investor but I must point out the utter ignorance and fool’s game politics of liberals. They always attack the results of people and companies that follows the rules. They never attack their own, short-sighted, unworkable, failed policies.

If anyone doesn’t like labor practices, vote for the people that will actually change them. But! Before you vote, kindly do a little REAL research from ALL sides, liberal AND conservative, to see what REALLY works as evidenced by results.

I am CERTAIN that the writer of this piece is an Obama voter and loyalist. I’ve got news for you… Current hiring policies are a DIRECT result of Obama’s (NOT) Affordable Care Act. You liberals can argue all day long about how wrong this is but the FACTS speak for themselves, Obama is YOUR OWN WORST ENEMY…

Posted by 1WorldDone | Report as abusive

So far, I can say that probably NOBODY writing a response here is acutally working as one of these low paid hourly associates. So… as I AM one of these underpaid hourly associates, I will tell you how life is. No more nails to bite. Rebecca Smith is correct, Wal-Mart does plan to eventually have ALL of its employees become part-time. Do I work for this store, no. I work for another BIG major retail store that pays most employees $8.50/Hr (Well-below poverty Level annual salary). OK, To the hot-headed extremist conservative that probably makes a lot more than me and is certainly NOT an hourly associate at one of these retail poor farms. Sir, Mr. Michael T. Duke (Wal-Mart CEO) made 23 Million Dollars last year. Oh yes, I support success, but the reason the average hourly wage at Wal-Mart is reported as $10/hour is because his salary is also included in this company-wide wage figure. This pathetic excuse that everyone is getting screwed by these retail places because of the President needs to have their FOX-News-Fed blood pressure readjusted so that their brain starts functioning again. My schedule comes out 2 weeks in advance and am currently getting 3 days a week work for a total of 20 hours a week. It’s just not working and I am seeking employment outside of retail if at all possible. These companies are forcing their best people to leave. Concerning this Kory Lundberg corporate-saturated canned message (By the way, I wonder Kory gets paid $10 and hour?) Maybe if he did his message would be different. If the “real Wal-Mart” is about building better lives and taking care of their own, why would so many of it’s associates be getting fed up and picketing outside of the store? Listen, at the store I work, you get low hours, plain and simple. They want you to be ready 24/7 and be near your phone to respond only when they need you. And then you are told by a manager “that’s retail”. You cannot plan a life with this. The health insurance they do offer is some type of “ghetto-poor-associate-plan”. Good luck if you get something major like cancer – you’re gonna die sucker. This so-called “associate” plan, very much different than the extremely few full-time managers and corporate staff have, covers only low-level basic stuff and corporate says “hey look, we offer ALL our staff insurance.” This is a joke. I’m waiting to wake up from the nightmare.

Posted by ReutersReaderMe | Report as abusive

Lori, WOW. The employees get an extra 3 hours per week at minimum wage. I bet your company figured out that if the employees got 4 hours per week instead, that would kick them off food stamp assistance. Wal-Mart couldn’t have that because it would cost them all that Food Stamp money that they get from their employees.

Posted by 2Borknot2B | Report as abusive

It figures… Mr. Kory Lundberg, with Walmart’s communications team comments get posted, the irrate conservative reader making comments such as “I am CERTAIN that the writer of this piece is an Obama voter and loyalist” and “I must point out the utter ignorance and fool’s game politics of liberals”. Yes, that person’s comments gets posted here. But oh, no… not an actual “associate” that this story is all about. An associate that making less than $10 and hour, bill collectors calling day and night and wondering if the future will bring any hope. An associate getting hours squeezed by those making millions. No.. those commments must be filtered out. I think it was very unfair folks to leave my comments out.

Posted by ReutersReaderMe | Report as abusive

1Worldsone. “Current hiring policies are a DIRECT result of Obama’s (NOT) Affordable Care Act. You liberals can argue all day long about how wrong this is but the FACTS speak for themselves, Obama is YOUR OWN WORST ENEMY…” Really, you speak of the need to research your facts before you post. Perhaps you should follow your own advice since Obamacare is nearly an exact clone of Dole care thought up by the Heritage Foundation for Bob Dole’s Presidential campaign, and they are a conservative think tank. The GOP even thought it was a great idea a few months before Obama and the Dems got it passed. Then Oh No its the worst thing that ever happened to America. Baloney. Costco seem to be able to provide quality products, pay decent wages and benefits and still make a great profit. Now you need to scurry off and hide because you are an embarrassment to working people everywhere.

Posted by RayGunsmess | Report as abusive

I worked at Wendy’s about 2 years ago, and I remember we were all jealous of a co-worker who started working nights at Wal-Mart stocking shelves BECAUSE he was making $10/hour; significantly higher than the $7.25/hour we were making (of course, after 6 months you got a ** 10 cent ** raise). Funny to see an article now about how little Wal-Mart pays – not that I disagree, just a matter of perspective is all.

Posted by Tipro | Report as abusive

It should be noted that most entry-level retail employees are of low skills and the employers experience levels of turnover that would bankrupt other industries. The idea that WalMart and other retail employers (per Washington DC) should pay above market or offer massive benefits for unskilled workers is abusrd.

And I am sure the author would be the first to raise the issue of increased prices for the things she purchases or the marginal service she would receive. The market determines the wage based on supply, demand, and the skills required.

Posted by COindependent | Report as abusive

Great to see a major article on the changing dynamics of the way we work. We’re certainly seeing this growing trend in the UK too. Jobinasecond has recently conducted a survey with 2000 store managers saying they only hire part time as well and the EU has extended employment rights to cover part-timers as a reaction to this trend. Recognising the move people are making (forced or voluntarily) to working multiple jobs on a part-time basis is key to growth and implementing sound, appropriate policy. Can’t ignore it anymore.

Posted by Jobinasecond | Report as abusive

I wonder why they have high turnover at these stores? Could it be the intolerably low wages?

That corporate BS artist claiming to speak for Wal-Mart is an embarrassment. the so-called stats he cites are actually making it worse for Wal-Mart! Employee pay is so low, proportionate to the costs of hte company that doubling the wages of workers would only require a tiny price increase to maintain profit margins. Then consumers might actually have some cash, but why would Walmart stick out their neck before any other company? WE should push for a much higher minimum wage – remember, associate positions cannot be outsourced to China, no matter what the “supply and demand” of Human Beings is.

Posted by Benny27 | Report as abusive

Walmart has to be the most socialist enterprise in America, where politicians, states and municipal governments are paid off to approve new Walmart stores every 1/10th of a mile, keeping the party elite in position, while the workers are squeezed and forced to rely on the public dole. It seems to me the best way to handle this is locally. To pressure local council members and representatives to reject Walmart stores at such a dense concentration unless they respect local workers and pay employees enough to live without relying on public assistance.

Posted by mayalibre | Report as abusive

Well Korey if you were making the crap pay I am making (been with this company 4 years now – still part time) and getting your healthcare taken away effective Jan. 1st (don’t tell me it wasn’t because of the Affordable Healthcare act either), still making under $10/hr… and yet my deductible for this medical I still have is $3,000 for a single person…. my hours (I have a fixed schedule and was told these were the only packages available so I picked the one with the most hours) reduced to 28 per week…. I doubt you would be so defensive about the company that is worth billions and could offer a whole lot more but won’t. Fix/Flex is a total scam. Our managers lied to us about what was available. They withhold certain shifts and only offer what they want to offer. People that have been with the company 10+ years have had their full time hours cut down so much that one 26 yr associate is now working 24 hours. Your flexible program is garbage… associates have to fight for the available hours they post like throwing dogs a bone…. full time picks first… the next day part time picks and by the time everyone else picks some people are left without hours for the entire week or are left with only 8 hours for the entire week (which happened to me once). We are understaffed and over worked and do not receive the proper support day to day from management. I don’t care what anyone else here has to say… if you don’t work there then you know nothing of what is really going on! I am still trying to find another job and it seems having Walmart on your resume does not help much because I haven’t been able to find something else. I live in the deep south and jobs are hard to some by. 90% of the people who work and shop at Walmart have food stamps and WIC. There are about 5 Walmarts and neighborhood walmarts in my town alone! Far too many but I hear the towns get incentives and money so they let this greedy behemoth of a company continue to grow like a fungus! It is an outrage!

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