Walmart (NYSE:WMT) stores across the nation have recently raised hourly wages for 500,000 workers. While this may sound like a positive, the decision could spell trouble for many of its employees as the company slashes employee hours.
Earlier this year, CEO Doug McMillon released a letter stating that the company would be raising wages to $9 an hour, 24% higher than minimum wage. The wage is expected to jump to $10 an hour by early next year. The concession comes after cries from disgruntled union workers recently reached a fever pitch. The retailer, the world’s largest in terms of annual sales, reportedly invested $1 billion in upping the hourly wage and training prospective employees. Basic economic principle, however, tells that if Wal-Mart does increase employee wages, they will find a way to cut expenses elsewhere.
According to Wal-Mart spokesperson Kory Lundberg, the cutbacks would only occur at locations in which workers were being “significantly” over scheduled. To clarify, the amount of labor hours being accumulated by staff members at certain stores were well above the amount needed to meet sales expectations.
While speaking with Bloomberg, employees at one Houston store revealed that their store has already been forced to cut more than 200 hours. Another store in Texas cut more than 1,500 hours. According to employee testimony, some workers have even been asked to take two-hour lunch breaks to counterbalance any excess hours they may have worked.
Employees may be getting sent home in droves, but the retailer—the country’s largest private-sector employer—wishes to reassure the public that the changes will not adversely affect customer experience.
"The reductions won't affect efforts to better staff stores, shorten checkout lines, and improve cleanliness and stocking” said Lundberg.
If you’re like me, however, you’ve grown accustomed to scouring Walmart’s twenty check-out aisles to find the one or two aisles that are actually open. So can such a reduction in their labor force really afford the customer better service?
In the aforementioned interview with Bloomberg, one employee told of a customer who had to wait half an hour before an employee was free to unlock a product that the customer needed.
It’s no wonder that the wage increase has not been met with open arms.
“Hard-working Walmart workers—many of whom did not even see a raise in pay—are having their hours cut all so Walmart can pad its bottom line,” said Levin, “This is a disgusting statement on Walmart’s values and how little it values its workers.”
If the biggest of the big corporations, with their fantastic economies of scale (and especially Wal-Mart's supply-chain supremacy), are searching for better profit margins by cutting labor costs, how well should we expect small businesses are faring?