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Economics 101 Strikes Again As Wal-Mart Wage Hikes Prompt Breadwinner Layoffs At Headquarters
In late July we suggested that Wal-Mart may be ready to fire as many as 1,000 employees at its home office in Bentonville. Our suspicions arose from an internal memo circulated at local staffing firm Cameron Smith & Associates. Here’s what it said:
"Please remember, these people are our neighbors and friends. You have a skill that will be very much in need when this goes down. You are experts in the job market and you know what it takes to get hired. This is a time for us to step up and do what we can to help."
This, as we pointed out at the time, is economics 101. When your business lives and dies by the idea of “everyday low prices” - indeed, when low prices become something of a religion, passing on rising labor costs to consumers simply isn’t an option and when Wal-Mart committed earlier this year to spend around $1 billion to boost the wages of its lowest paid employees it was only a matter of time before the job cuts started rolling in.
Of course Wal-Mart tried to avoid this by squeezing the supply chain, first with requests that suppliers cut back on marketing, then with the imposition of storage fees, and finally with demands that suppliers pass along savings from the yuan devaluation to Wal-Mart corporate. But you can only extract so much by extorting your suppliers and as unlikely as it might be, the company didn’t want to end up tarnishing its record as master of supply chain management by inadvertently starting a supplier mutiny.
And so, in a desperate attempt to preserve its razor thin margins, Wal-Mart moved to cut hours and because the optics around first raising the minimum wage and then firing a bunch of minimum wage workers would be so poor, the logical next step is to cut jobs higher up in the food chain, which explained the Cameron Smith & Associates memo.
Sure enough, two months later, the home office job cuts are official. Here’s WSJ:
Wal-Mart Stores Inc. is preparing a round of layoffs as early as Friday that would affect hundreds of employees at its Bentonville, Ark., headquarters, according to people familiar with the situation.
Human resources employees have reserved many of the meeting rooms at the headquarters on Friday
as well as small rooms typically used by suppliers to pitch products to the retail giant, according to a person familiar with the matter.
Some Wal-Mart department directors were told to cancel travel this week or make sure they come to the office on Friday, said another person who spoke with the Wal-Mart employees.
Fewer than 500 workers are expected to lose their jobs. About 18,600 people work for Wal-Mart in the Bentonville region. Wal-Mart declined to comment.
And in an irony of ironies, the suddenly jobless Bentonville employees will now turn to the supply chain for work:
Any layoffs would also ripple through the large consumer-goods companies that have offices in the region to work closely with Wal-Mart, often their largest source of revenue. Suppliers frequently build their teams to mirror counterparts at Wal-Mart, and many will likely be inundated with resumes from former Wal-Mart employees, suppliers and consultants said.
But these job seekers will likely be out of luck, because as noted above, and as detailed in these pages on countless occasions, suppliers are, if anything, likely to be firing not hiring because Wal-Mart is squeezing them for every last penny of savings.
We close with what we said when we first reported that the retail behemoth may be considering cuts in Bentonville (the first excerpts are from the Arkansas Democrat-Gazette):
Cutting through red tape and trimming bureaucracy has been among the goals of McMillon, who took over as CEO in February 2014.
"As we've grown and time has gone on, we've created pockets of our business, situations where people don't want to share bad news. Lots of PowerPoints get built, lots of pre-meetings are held to socialize things so people aren't surprised during a meeting," McMillon said. "That is bureaucracy. That slows us down."
Got it. Too many people are working on PowerPoints and when someone making $10 an hour calls the home office, the hold time is too long. These are clear signs of an elephantine, Washington-esque bureaucracy, which must be done away with.
Or something.
Just don’t dare suggest that the cuts are the indirect or even direct result of the wage hikes that will cost the retailer around $1 billion this year, because that would mean that critics of the push to hike the pay floor are correct to assert that forcing employers to pay more will immediately result in equal and offsetting layoffs.
Only here they aren't necessarily "equal" at all.
That's in no way a commentary on the "worth" (in a philosophical sense of the word) of an hourly worker versus a salaried employee, but if layoffs in Arkansas do materialize as Cameron Smith predicts, it seems entirely fair to suggest that the pittance given to hundreds of thousands of low paid workers will ultimately come at the cost of 1,000 or so breadwinner positions.
We'll leave it to readers to determine whether that is a net win for the economy.
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Walmart would not be having those layoffs if it were not the 2nd worst grocery chain out of 68 evaluated by Consumer Reports in April 2015:
Walmart ranks second worst in survey of supermarkets where Americans like to buy groceries... while Wegmans takes first placehttp://www.dailymail.co.uk/news/article-3025259/Walmart-ranks-second-wor...
Sacrificed for the sake of corporate profits (and executive bonuses).
God Bless America.
Is this not the Hoax and Chains that the socialist jew media convinced Americans to vote for?
If American'ts aren't smart enough to navigate the obvious "socialist jew media" propaganda, then maybe hoax and chains is what they deserve.
I think you mean pro-socialist (fascist version of course!) media complaining about an increase in minimum wage that is still decades behind inflation adjusted value. Minimum wage now is significantly lower than 1976 inflation adjusted wages.
Also what about the socialist welfare In the form of Walmart being subsidized by SNAP, TANF and Childcare subsidizes for it's employees (even managers!!!) footed by JOhn Q. taxpayer instead of them paying a living wage?
Maybe WalMarts model of intel agency to prevent unionizing and all profits distributed to CEO's and stock holders isn't sustainable?
Costco offers similar prices and is killing it in terms of growth and profits. The difference? Costco provides good living wages, healthcare and profit sharing. Don't worry the CEO still makes a fortune and far more than workers, just not quite as fabulous of an amount as seen in the Walmart boardroom. Also Costco employees earn too much to be subsidized by SNAP TANF et al.
Correlation is not Causation. More than likely Walmart has just outsourced those jobs to Asian countries - like the rest of America's manufacturing jobs - or they are planning to jump on the H1B Visa train like the rest of Corporate America.
Sorry to disagree with the Tylers on this one, but I don't think the minimum wage hike is directly behind the layoffs back at corporate. Walmart will probably reduce the hours of their hourly wage earners to get around the higher cost that the new minimum wage now imposes.
The United States and the heads of their corporations are not run by people who think in the long term.
Long term in corporate group think is next quarter. Thinking a year in advance is considered 'strategy', not planing. Two years is nearly unheard of in a world of quarterly reporting.
Sadly, I have to agree.
Each day I get up, go out and give my Ford 150 a hug for helping me transport and install materials rather than be in a pre-meeting meeting discussing protocols in a room stuffed with a dozen cubicle rat- dwellers.
You need to be blogging on a F150 site, pal. I suspect that at this very moment guys like you are talking about how bitchin the new F150s are this model year.
LOL dude. Yea, now that you mention it I DREAM of getting a new F150- or 250! I like the RAM models too. Ahhh but why go into debt when my truck is paid off?
Hey WW4F - my 1999 Ford Explorer runs like a champ - cost me only $2600 in 2011 - and has close to 250K miles...God Bless Ford! ;)
Ferd SSSSuks!
My 1982 Chev 1T has (???) miles on it (odometer broke abt 20 years ago) and runs really well since I replaced the "original" engine (POS) and upgraded a few other parts (designed for increasing part sales @ GM). I can haul 2T of anything that will fit in the box without dribbling onto the hwy, or falling out the sides. AND like most Chebbys, it comes with unadvertised extras - like the rust hole in the floorboard where you can dump your cold coffee without pulling over. I did invest in the optional piece of floor carpet for winter driving. Truck name (good trucks MUST have names) is "Pigpen" 'cause when you open a door, stuff falls out onto the pavement which saves you the trouble of reaching in to get it.
I want to hate on the F-150 (Toyota Tundra Guy, Myself), but my father just bought one and I have to admitt...it's pretty damn nice! He goes all out with his trucks so the interior on this thing would almost put a Cadillac to shame. Even has the automatic running boards that descend when the door is open…although they would never last in the kind of terrain I find myself, I gotta admit it's pretty cool. :-)
Time will tell if it holds up. I know a few guys that have had problems with their engines in recent years (2000 to 20-Teen models), so I steered away and couldn't be happier with my '08 Tundra 150,000 miles and with the exception of a wiper blade motor (covered under warranty) - have only had to do normal maintenance. Had been a Dodge guy, but that frigg'n "Check Engine Light" would come on almost every 5,000 miles!
Not surprised at all. ZH blames raising wages for all corporate ills. Next time a 12-year lemonade stand operator hires his friend to help out for more than minimum wage, ZH will predict that the lemonade stand operator will go bankrupt.
They also rely on lots of part time and temp workers. They had to raise the minimum wage to attract workers, their turnover rate was 45%.
The point where capitalism becomes a sickness is when a company can't stand to make less than $16 billion in profits and feels the need to fire employees. Greedy cunts!
So gross profits are how you determine if capitalism "works" or doesn't "work"? 7 upvotes and no downvotes. ZH is infested with stupid fucks these days.
I mean, exactly what gross dollar amount is an acceptable profit in your mind? Does it matter to you how much capital is invested? Does RoE matter?
You just made my point dweeb! How much profit is enough? For you and the rest of these bloodsuckers, there is never enough profit. They will steal, break any law and impoverish their own employees to "earn" another buck. Go learn something real son, because your fancy book learning was for shit!
IANAMBA but excessively high profits indicate an impaired free-market or legally engineered barriers-to-entry. Walmart, after decimating decentralized Main Street retail by exploitation of Chicom labor camps and supplier externalized pollution, is the only choice available to some captive communities. Those communities should pursue anti-trust restructuring but that would require effective governmental representation.
McMillan's salary would likely total about 500 employees. Shitcan him and put 500 people on his job. See who does better.
The 7 Walton family heirs to Sam's fortune are worth more than 40% of ALL Americans. SEVEN people are worht more than almost HALF of the population of the US. But some are 'giving back' - the way rich people do.... like the art museum in Bentonville filled with paintings worht millions... I expect most Walmart employees would rather earn more or at least work 40 hours a week....
And those heirs are collecting regular dividends on all the Walmart stock they own.
Inherited wealth is all about keeping what you have and getting MORE - while rarely doing any real work to earn it.
To be fair they are only administrators. Having an insane amount of money usually means little more than having pieces of paper saying you own physical assets used by someone else, and that goes for all billionaires. Any wealth beyond what is personally used is merely being administred.
The top generals at the pentagon manage budgets in the order of hundreds of billions of dollars. They decide how it is used, they spend it, but only use a few millions themselves, you can only snort so much coke. Its similar with billionaires, they use a few millions or tens of millions on themselves and manage the rest in the form of investments that benefit others.
"So what's the problem?"
-The Seven People
And that's part of the problem.
After Sam died, the family lost interest in running the Golden Goose that makes them billionaires. They turned the thing over to the retail geniuses of the Ivy League. The people who now operate this behemoth have never talked to a Wal-Mart customer and the tint on the limos makes sure they don't ever have to see one. Like running John Deere, the prospective CEO of Wal-Mart must have cursed his good fortune of having to actually set a foot down in flyover country. (Deere is HQ in Moline, Ill. the CEO's tend to gag that they will be so close to the Hoi Polloi.)
FORWARD RETAIL SOVIETSKI!
If arbitrary minimum wage worked you'd just set it at $100 per hour and all would be well.
tyler heard you, no debt.
here is a walmart offering for your morning fodder.
Wait. You mean price and quality are related in some manner? I thought even the dopes at CR understood this.
Heck - And I had planned to work for Walmart when reaching the age of 67 or whatever when Soc Security allows you to earn as much as you want without having the SS benefits reduced. I was planning on working 75-80 hours per week. lol
I heard about that too; it used to be age 62, so that I could draw retirement and work at wherever and not have SS income reduce my retirement pension payment. BUT it doesn't workthat way anymore. As of January 2014 I think that windfall was done away with -- my retirement system checks with SS all the time for any quarter of income.
When fully vested,,, 65 or 66 or 67 depending on your birth date you can earn extra without losing benefits.
You do have to pay tax on a percentage of it.... depending on your income.
What I have learned so far but contact the SS office to be sure...
Silver lining. They do no not have to live in Arkansas much longer. I heard North Dakota is a nice place to spend the winter.
Redoubt.....bitches. This is one way to turn formerly productive citizens (oops, consumers) into self sufficient rebels.
Levon Helm was from Arkansas, as a Canadian I'd rather be there than North Dakota!
Levon originally went to Canada to visit their national igloo. Apparently, some fat kid was playing a joke on him.
As an acquaintance of mine I can tell you he loved his home in Woodstock NY, where the weather and culture more closely resembled Canada than the deep south.
This is one way to turn formerly productive citizens (oops, consumers) into self sufficient rebels.
Holding my breath. Call the ambulance.
Walmart is dependant on the EBT consumer....Walmart has catered to the low-end of society for years. I personally choose not be around that type of nonsense...Walmart has no one to blame but themselves...
Costco now accepts EBT cards.
Doesn't Chase still manage and operating the EBT systems?
I thought Walmart was dependent on govt to turn their stores into FEMA camps. Whatever happened the Dave Hodge BS, Jade Helm, and the roundup of antigovt dissidents? I'm still here.....did they miss me?
Walmart is just being a good patriot and firing more people tryin got push the BLS rate down to 4%.
'Layoffs', the euphemistic word for 'fired.'
Fourth quarter begins then of course there's this
http://4.bp.blogspot.com/-3VrZl7ehzOo/Vgwqmn009iI/AAAAAAAAT2M/xFDwSo8r9N...
Wow! That's a classic "Big Boobs" bottom pattern!
What blog is it from?
Obama recovery ? Health care cost spike 200% . If you support the facist fuckers I piss on you.
I was at my local Wal-Mart (Lake City, FL) after 10:00 PM Wednesday night. I was looking at new Casio watches in the jewelry case. I was also looking for an employee who might be able show me one of the new watches. A passing couple noted that I was looking around for a Wal-Mart employee and they informed me that the jewelry department was closed. They said that they, too looked for an employee to open a display case. They found a Wal-Mart employee who told them that the jewelry department was closed and that it would not reopen until Thursday morning. The employee told them it didn't matter that they wanted to buy something that night. They could not have what they wanted. They would have to wait until Thursday morning. I walked off muttering, "I'll buy it from Amazon.com!"
After paying dividends w-mart made 9 billion dollars ttm.
They could pay out 1 billion a year more in wages without cutting any costs
Commie. That money belongs in the pockets of the Walton family. /s
So if you owned a small retail business, and were making $90,000 net, would you be ok with someone telling you to just pay your employees $10,000 more because some random asshole considered that to be fair?
Computer programs took their jobs.
A few more McMansions will be depopulated.
Not many employers in Bentonville.
unless these 500 people are making $1mm a year, I'm confused as to how laying off 500 people at corporate does anything to make a dent in the wage hike. Maybe it is part of the overall cost cutting strategy to cover the wage hikes but surely doesnt do as much as ZH is implying. I assume before they announced the wage hike they had a strategy to cover the extra costs to the penny. Not that big of a deal, IMO. What CEO wouldn't like to trim some fat from corporate under the guise of helping the lower class workers through out the country?
Their China strategy isn't working.
lol +1
their entire business is a China strategy
They want to build Walmarts in China for their growing middle class.
If we are to believe their numbers, it's not growing.
Economics 101 propaganda Strikes again.
https://www.youtube.com/watch?v=NdjOyG6NnCA
If Walmart can simply afford to fire employees to save costs, they were never needed.
How does this math work? How much were these 500 home office people making for it to have any dent in an estimated $1B of cost to raise wages on "hundreds of thousands of low paid workers"?? This seems like nothing. Much larger job cuts from the stores will have to be coming.
It does not have to work. Dollars are spent on salaries, cents saved by firing a few greeters. It makes for good propaganda to keep the SJWs at bay.
Same as with the usual threats of lettuce prices skyrocketing 10 fold if non mexicans pick it.
Or restaurants threatening to completely automate their operations with not yet existing robots.
Wal Mart has always coem off as being cult-ish to me, like Mormonism.
Our country is ran by idiots and America's largest employer is ran by idiots, This is becoming systemic and the sane people are becoming the minority. Somewhere in the past in the past 20 years America put it's foot on the "go batshit crazy" gas pedal.
tiger wake up:
"Our country is ran by idiots and America's largest employer is ran by idiots"
just because you do not like the outcomes of the elite ..they are not idiots or stupid..
NWO elites and c banks are run by very smart ass holes, who just have very different goals then us serfs.
they are winning.
The only way serfs 'win' is with pitchforks - and even then the 'win' is usually temporary before they're crushed by the lord's knights, Pinkertons or troops
Serfs never actually "win". They simply rebel and that makes them feel better for a little while. They soon find out they can't organize a pissing contest in a brewery, they don't have the skills.
The national IQ has been lowered by importing millions upon millions of illiterate 3rd world retards.
As these 3rd world retards procreate FULL RETARD children the public school system must cater to the lowest IQ standard deviation.
This is why we now have Common Core in our public school system.
BRAWNDO, its what plants crave!
America is heading to be worse than Idiocracy described
What I would like to know is the total head count at Walmart now and compare it to staffing levels vs a few years ago. Based on my anecdotal evidence, there appear to be 2-3 times as many employees at Walmart stores.
I guess it's back to lower wages and SNAP cards again.
I have several friends at Wally World HQ. There are over run with foreigners that are contractors from India, stealing American jobs. The Indian lis called, Tata Consultancy. Bentonville is overrun with Indians.
I have worked with Indian companies and personnel. They are the ultimate bean counters with zero common sense and completely unwilling to make any decisions or take on any responsability.
Left unexplained is why WMT gives a squirt of piss over the "optics" of laying off people after raising wages. Did it make some grandiose announcement that it has defeated the law of demand and can raise wages higher than the curve?
This is all theater designed to brainwash the Walmart plebs into thinking that they don't need to unionize.
By the time these wage hikes are fully implemented the cost of living will have consumed all their increased wages.
Once a corporate slave..............
Bentonville, arkansas, and they're going to go find another job with another employer, maybe a competitor? Not likely. America and wallyworld went down this cheaper price no matter what road and now that china makes everything because of this since all manufacturing jobs had to go overseas for cheaper labor we will suffer for years until this situation self corrects. Wal Mart will, in history, be known as the textbook case for perversion of our economic system specializing in congressional payoffs to eliminate competition in any form.
Actually this is the Globalist corporatist economic model going forward.
With the implementation of all the Trans-nationalist trade treaties like the Trans Pacific Partnership and the Trans Atlantic Partnership you can expect the US to begin to resemble Venezuela, China and India in the next 50 years.
China and India trade freely, not Venezuela.
this is simply PR move. You can not let a wage increase for the peasantry happen -- an increase you were forced into by public opinion --- go unremarked. You must demonstrate that this causes MASSIVE suffering to thousands......
so that the peasants will not try again.......
and god help us, jeopardize the system of wealth transfer from the lowest classes to the upper classes.
Years have been spent perfecting this system and the third worldization of the US is almost complete.
Broken windows theory --- make a big, huge stink about some little change or "attack" and the big ones won't happen to upset the flow of riches to the Walton family and large shareholders.
Maybe the CEO and his staff should prevent the "breadwinner layoffs". They have the power to do it through any number of means. They just decided not to. Why? My guess is that they are simply greedy and corrupt... just a guess, though.
Who cares how many lives you destroy for a Christmas bonus. Hell Goldman destroyed a whole country for a Christmas bonus. Yea, profit baby screw people it's all about profit.
FUCK WAL-MART!
Fire the HR department.