Walmart’s Worker Hours Reduction Shows It Is Caught In A Classic Retailer Trap

31 Aug 2015 | Author: | No comments yet »

Wal-Mart cuts employee hours after raising minimum wage.

Walmart has moved to cut the number of hours allocated from some of the retailer’s workers in a bid to keep a lid on costs as it invests $1 billion this year on higher wages and training.The retail behemoth announced in February that it would be spending about $1 billion to raise its minimum wage to $9 per hour starting in April, a move that received praise from higher wage advocates around the country. The world’s largest retailer earlier this month told store managers to rein in expenses by cutting hours that have been added beyond what the company allocated based on sales projections, Bloomberg reports.

However, according to Bloomberg, who first reported the story, that has resulted in managers asking their employees to leave shifts early or take longer lunch breaks in order to cut down on labor costs. A Walmart WMT -0.26% spokesman told Fortune said a small number of stores were “significantly over” on scheduling, meaning they were over-scheduling workers beyond what was needed for the sales those locations were estimated to generate. “The reductions won’t affect efforts to better staff stores, shorten checkout lines, and improve cleanliness and stocking,” Walmart spokesman Kory Lundberg said. If the goal is making employees better off overall, it’s useless for companies to increase wages while simultaneously cutting hours for individual workers.

As Mike Patton wrote for Forbes last November, raising the minimum wage “could cause a loss of jobs if the business is forced to reduce expenses, again, to maintain profitability.” However, as Burt Flickenger, managing director at Strategic Resource Group LLC, told Bloomberg, there is a more immediate risk: employees choosing to leave. “Wal-Mart risks a talent drain at a time when McMillon has made meaningful improvements in the company,” Flickinger said. “All these competitors will take Wal-Mart workers to make themselves strong and help make a major competitor weaker.”

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