The One Problem With Wal-Mart's Recent Hiring Spree

Tyler Durden's picture

... Is that it is for temporary workers.

 Of course, to some this is a good sign and an indication that eventually, at some point, all these workers will become full-time. Alas, it isn't. Recall that as we pointed out first back in 2010 in "Charting America's Transformation To A Part-Time Worker Society", this has been a long-term transformation, which has only accelerated in recent months with the implementation of Obamacare, whose provisions (which once again had to be passed to be grasped) effectively punishes employers by hiring full-time workers.

Since for corporations the bottom line is all that matters, this is manifesting in the hiring plans of the world's largest private employer. And where Wal-Mart goes, all other cost-cutting corporations (which in a time when revenue growth is negative, is everyone) are sure to follow. In short: while the quantity assessment of jobs may be improving, it is the quality that is collapsing, as those hired are mostly into lower-paying jobs (this chart explains it all), or just part-time with no job security, no leverage, and zero benefits.

From Reuters:

Wal-Mart Stores Inc has in recent months been only hiring temporary workers at many of its U.S. stores, the first time the world's largest retailer has done so outside of the holiday shopping season.

 

A Reuters survey of 52 stores run by the largest U.S. private employer in the past month, including one in every U.S. state, showed that 27 were hiring only temps, 20 were hiring a combination of regular full, part-time and temp jobs, and five were not hiring at all. The survey was based on interviews with managers, sales staff and human resource department employees at the stores.

 

The new hiring policy is to ensure "we are staffed appropriately," when the stores are busiest and is not a cost-cutting move, said company spokesman David Tovar. Temporary workers, he said, are paid the same starting pay as other workers.

 

Using temporary workers enables the company to have adequate staff on busy weeknights and weekends without having to hire additional full-time staff.

And without having to pay full-time wages. Of course, in the new normal, part-time wages are sufficient to gobble up the houses that make up the "housing recovery."

Walmart U.S. Chief Executive Bill Simon also confirmed that the company is hiring more temp workers. "Their hours flex by the needs of the business from time to time," he told reporters the day before Wal-Mart's annual meeting last week.

 

The hiring strategy could save Wal-Mart money by trimming labor costs at a time when its margins remain under pressure. Many consumers are still struggling given a high jobless rate and lack of income growth, leaving retailers of everyday goods with little pricing power, according to other company CEOs and benefits experts. Competition from dollar stores, other big box discount chains and grocery stores is also intense.

 

It also could set an example for some other companies as they look for ways to cushion themselves from a potential rise in healthcare costs next year as a result of President Barack Obama's health care reforms, according industry experts and retail executives. Tovar said that the move wasn't related to these reforms, commonly known as Obamacare, but he did acknowledge that it could take a year or more for temporary workers to receive health care benefits. Turnover in retail often occurs within the first few months.

 

...

 

Temp workers typically have a completion date after which they have to reapply for work, but part-time employees work fewer hours than full-time workers indefinitely.

This is coming to every retailer near you, despite promises to the contrary:

The move to hire more temps throughout the year has not caught on with Wal-Mart's rivals such as Target, Costco and Sears, all of which said they are hiring full time and part-time employees but don't plan to hire temps outside of seasonally busy periods like the holidays.

 

"I don't know about others' practices or philosophies, but I can say that Costco's general hope and expectation when hiring an employee is to make it a long-term relationship," said Patrick Callans, vice president for human resources and risk management at Costco.

Mr. Callans, however, is more concerned about the "long-term relationship" with his shareholders, which is why the full-time facade will be the first to go once the company has no other place left where to cut costs.

But while wages were the primary driver for the part-time rotation in the past, the key variable now is none other than the president and his healthcare plan.

Hiring temps is "one strategy" that retailers could use to mitigate the potential rise in healthcare costs due to the new healthcare care law, said Neil Trautwein, a healthcare lobbyist for the National Retail Federation. "Another strategy could be employing more part-time employees."

 

Wal-Mart already has begun to change the healthcare plans it provides workers. Last November, it said that newly hired part-time employees would have to work a minimum of 30 hours a week, up from 24 hours previously, before they can qualify for health coverage.

 

Its U.S. employees also faced an 8-36 percent increase in premiums in 2013, the company said at the time, prompting some workers to forego insurance. The majority of eligible employees at Wal-Mart sign up for the company's health insurance.

 

Under the reforms, large companies must next year offer healthcare to 95 percent of employees who work more than 30 hours a week or pay a penalty of $2,000 per worker for the entire workforce.

 

When the work hours are so variable that the employer is not certain whether an employee qualifies, they can elect to determine eligibility by measuring hours during a period of up to 12 months, a strategy Wal-Mart said it plans to use.

 

Temp workers may therefore have to wait a year - provided they are still employed at the company - to find out if they are eligible.

 

"A temporary worker may never get that far," said Barbara McGeoch, a principal and health benefits expert at consulting firm Mercer's legal, regulatory and legislative group. "They may never get the coverage.

It would be ironic if these same part-time workers are the same who now are doomed to be locked out of the full-time labor force because they supported Obama's first-term sole achievement, Obamacare, which is now rapidly morphing into its true self - the biggest hindrance to the restoration of a healthy and vibrant job market. But with Bernanke at the printer, who needs such old-school things like work?

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Crash Overide's picture

Walmart is a piece of shit...

smlbizman's picture

i can verify costco...the one i go to, the same faces have been their since day one.....i think it shows well on them....

Fleecer's picture

once the average american (who is working) has 2.2 part-time poverty wage jobs with no benefits, we'll skyrocket to 186% employment.  Mission accomplished FED.

 

James_Cole's picture

Costco has a totally different ethic to its employees which makes this statement...

Mr. Callans, however, is more concerned about the "long-term relationship" with his shareholders, which is why the full-time facade will be the first to go once the company has no other place left where to cut costs.

...totally baseless. Costco has shown on many occasions that it values treating its staff well more important than shareholder grumbling. 

But while wages were the primary driver for the part-time rotation in the past, the key variable now is none other than the president and his healthcare plan.

This is also bullshit, temp workers are very popular all over the western world. In the US unpaid internships are also very popular for the obvious reason that they're unpaid, not because of Obama's terrible healthcare plan (criticisms of said plan being a separate issue).

It's simply neoliberalism at work.

ShrNfr's picture

Great. Pretty soon the people who work at Walmart won't even be able to afford to shop there.

Crtrvlt's picture

i think that's already happened 

Citxmech's picture

Which is why they are currently on a downward slide.

Midasking's picture

if we all work for Walmart and all shop there the trade deficit just grows making the problem that much bigger.. we need to open up a walmart in Asia and export to it! Good luck with that.  http://tinyurl.com/lq63ahd 

Id fight Gandhi's picture

They shop the dolla' stores.

NihilistZero's picture

Dollar stores have a lot of good stuff amongst the junk.  The one across the street from my business carries tons of overstock and near expiration food products.  I pick up stuff for my Mom there all the time.

mjorden's picture

"The One Problem With Wal-Mart's Recent Hiring Spree"

 

I thought the answer would be ... NOTHING being produced and cheap products being pushed.

waterhorse's picture

I thought the one problem would be taxpayers being forced to subsidize Wal-Mart workers (foodstamps and healthcare), but alas, no mention of THAT at all... thus the 1 star rating I gave the article.

madcows's picture

Blame the Government, not Walmart.  The democrats forced mandatory healthcare for full time employees on american companies.  What did you think was going to happen?  Companies have to make profits.  If the fucking government institutes shitty expensive policies, then companies must react in a way that allows them to remain profitable.

NotApplicable's picture

Better still, is that the level of hours worked before being required to be paid benefits has been lowered.

Of course, all of the delusional lefties who gave a "Hurrah!" at the news of MORE benefits, now see the reality of increased layoffs, or reduced hours instead.

Our payroll went down for the first time ever recently, as we've had to move employees out of our part-time system, only to rehire them as contract workers from local agencies.

MachoMan's picture

only to rehire them as contract workers.

Bingo...  1099 nation here we come.  That said, there's more deductions to be made on a schedule C than a schedule A...  I know I harp on it, but I can't fathom anyone expects the taxing authorities to be able to collect more money when incomes decrease AND when what's left isn't subject to the same AGI limitations, withholding requirements, self employment tax (depending on how situated), etc.  Which necessitates further printing... 

DaveyJones's picture

Silly the government is big market controlling business exploiting the masses (and paying little taxes). It's a two headed snake

How come Mr. Costco (6th largest) is fabulously wealthy with employees with greater benefits, greater pay and less turnover? Could it possibly be that if you are good to people you sometimes get rewarded? 

alangreedspank's picture

+1. And I'm pretty sure people with actual skills working for Walmart are paid handsomely. People think Mom & Pop weren't greedy and paid you like 20$/hr to place products in displays and that's gone because of Walmart...sure.

SpiceMustFlow's picture

I've gotten in so many arguments with fucking Libtards on those basic points. The most recent with one of those donkeys that wishes mediums of exchange didn't exist and we all just did shit for eachother out of the goodness of our hearts (yearning for a future without scarcity). 

In the same conversation this guy, who now works for the Texas Senate as a paper pusher, informed me about how awful it is that TX doesn't allow you to go on Medicare at 26 because he thinks the current jobs available to him are under his pay grade. I worked a job with him before and he's lazy, incompetent, has no medical problems, and spends most of the day strategizing on how to sneak off and smoke grass. WE ARE FUCKED FUCKED FUCKED.

DosZap's picture

Blame the Government, not Walmart.

 

Roger that, if you work 30hrs,you MUST be covered.So, they just make sure you do not get those 30.Thank You Unca Bama.

The Invisible Foot's picture

Did anyone else see the star power at this years shareholder meeting for Wal-mart? Damn.

kralizec's picture

DumbassCare effect.  Priceless.

q99x2's picture

Bama got a phone and a med a care foe each of em.

He be substdize the Wamut.

Anyone see my ferret?

fonzannoon's picture

I worked at Sam's Club when I was in college. It's like being in a dungeon. The amazing thing was I would get to this dark cave at like 7am and put on my stupid shirt and then everyone would do this big cheer. It freaked me out, That was in 1996 when times were good. I could only imagine it today.

ParkAveFlasher's picture

That Fonzannooon, he wants to be different, double his Kool Aid concentration!!!

fonzannoon's picture

My life story is just like a Simon Black article. I just choose not to rub it in everyone's face.

"Having grown up in Cheybogan, I can tell you there are two types of Sam's club workers...."

ParkAveFlasher's picture

I have to stop the Simon Black stuff, my wife is wondering why I'm on the toilet with Galaxy Tab for a half hour a night rather than playing with the kids.  [edited for clarification as to why I was on the toilet].

Dr. Engali's picture

LOl....You, my freind. are messed up :)

 

Yes_Questions's picture

 

 

Times are GREAT!

 

They have beatings til morale improves..

 

Oh, and nets outside the windows of the factories over in new Detroit.

Id fight Gandhi's picture

Mid 90s were the heydays of SC. Even the bagless, cardboard box leftovers had their charm.

Now, their prices aren't even competitive. Who needs bulk of something that you'll just waste anyway? Very few to select from and no help at all at the stores.

Bam_Man's picture

Agree.  I call it "Scam's Club". Many items are cheaper at the Wal-Mart next door and you don't have to buy a carton of six at a time.

The Scam's Club/Wal-Mart business model has three main elements: exploitation, exploitation and exploitation.

MachoMan's picture

I find SC prices generally cheaper than walmart (by volume/quantity/etc.) AND the products Sams sells are better...  e.g, electronics, produce, office supplies, cleaning supplies, shelving, furniture, etc.

Crtrvlt's picture

are the executives taking pay/benefit cuts?  doubtful......

Bohm Squad's picture

No, but they're likely working part-time hours if that helps.

Yes_Questions's picture

 

 

Less we forget.  FUCK YOU Wal Mart.

 

May your last hire be Realtor to sell your ugly, empty buildings.

 

 

insanelysane's picture

Why the Walmart hatred?  Government is nationalizing health care and Walmart is nationalizing retail.

Yes_Questions's picture

 

 

My Soma wore off.

 

New doses don't come in the UPSFEDEX til end of June.

catch edge ghost's picture

"Flexible Associates" bend over better. Everyday Fascism.

insanelysane's picture

All these temp workers need to do is invest all of their extra cash into the stock market and they will be filthy stinkin rich in no time.  Or was that just filthy and stinkin?

kralizec's picture

I tawt dey wuz suppozd to buyz tweazeries?

;)

DaveyJones's picture

there's only one problem with Walmart? Oh, read the rest of the sentence

Sutton's picture

If you voted for Obama you're a fucking retard.

SpiceMustFlow's picture

If you voted at all you're a fucking retard.

DaveyJones's picture

if you voted for any retard you're fucked 

SILVERGEDDON's picture

Fuck me, now where am I gonna get minimum wage and a day glo vest to go with my full time greeter grin ?

I don't have a part time greeter grin certificate. Mom was right, shoulda stayed in school. 

yabyum's picture

Watch for more part time hires, got to cut hours of full timers to screw them out of their health benefits. Arbys here in Utah will have only 5 full timers per outlet, the rest of them can eat shit. I did not know what they did with beef assholes till I ordered a sandwhich.

The Carbonator's picture

ObamaCare has created a new invention Fiat Employment, based on Fractional Reserve People.

 

In the Past

2 Companies Hire 2 people to each work a 40 hour week.  (80 Hours total Worked.  2 People Employed)

 

In Fractional Reserve Employment

2 Companies hire 2 Part Time employees at 20 hours each.  (80 Hours totally worked.  4 People Employed!)

So if you could get 1 person to work 8 Jobs at 1 hour each.  You got yourself 8 Employees.  This Recovery is MAGICALICIOUS!

GreatUncle's picture

Yep ... thing is all those part time employees need a lower cost base or it ain't sold. Then can you see the government debt growing like Japan's until the FED if they are not all in soon will be through collapsing tax revenues.

Japan is now all in to avoid triggering the level at which default becomes certain the US, UK, EZ are all just at an earlier stage of exactly the same process.

A self fulfilling prophecy and they talk about like it is a good thing.

sschu's picture

Fractional Reserve Employment

This is the way I see it going, especially for the hourly people.  Two thing will happen:

Instead of two forty hour employees, companies will hire three 27 hour employees.

Instead of these employees having a single job at 40 hours, they will have two jobs at 25 hours.

And they will hit the exchanges for their mandatory health insurance.  Subsidized by us all of course.

This will take much of the resposibility for health insurance away from the employers (which they want) and give the responsibility to the government (which they also want).

All so predictable ... and assured to expedite our bankruptcy.

sschu

 

 

 

The Carbonator's picture

The beauty of it is that both companies can hire the same 2 people!  Yet the total Employment is now 4.

 

2 + 0 = 4

 

To Infinity and Beyond!