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Amidst Historic Labor Shortage, The Retail Race To Secure Tens Of Thousands Of Holiday Workers Has Officially Started

Tyler Durden's Photo
by Tyler Durden
Sunday, Sep 05, 2021 - 05:00 PM

On Thursday of this week Walmart decided to give more than half a million of its employees raises of "at least $1" in the latest move to try and shore up its employee base heading into the ever-important holiday season. 

Big box retailers like Walmart routinely bring on tens of thousands of temporary workers for the holidays, but this year will see increased pressure to retain labor in the midst of a historic, country-wide labor shortage that has been spurred by 18 months of "free" government stimulus. 

Last year heading into the holidays, Target provided a coronavirus health plan and paid workers $15 an hour, Reuters reported. This year, retailers will try to one-up each other even further in order to draw the attention of a decreased labor pool. Walmart's U.S. average hourly wage now stands at $16.40 per hour. The new raise goes into effect September 25.

Walmart also said this summer it will pay 100% of college tuition and book costs for associates. 

Greg Portell, lead partner in the global consumer practice of consultancy Kearney, told Reuters: "The biggest challenge for retailers going into the holiday season is going to be how do they get the sales associates and the warehouse workers in position to fulfill demand."

Cynthia Murray, 65, a 20-year Walmart worker from Laurel, Maryland, wasn't impressed. She told Reuters: "When Walmart touts its average pay at $16.40 an hour, it distracts from the reality that its business model still relies on poverty wages."

Walmart's raise comes days before the national end of federal unemployment benefits. Kenneth Dau-Schmidt, professor of labor and employment law at Indiana University Bloomington, concluded: "This is significant. I mean, if you look at it in percentage terms it's not much, but this is Walmart - they don't really do this. Companies are having trouble getting people back into the harness after being out for so long and this is another sign that the labor market is readjusting."

As we noted earlier this week, both Amazon and Walmart are about to make massive pushes to add more than 55,000 and 20,000 employees, respectively. Amazon is looking for corporate and technology employees while Walmart's hiring is focusing on supply chain. 

The move for Amazon to hire 55,000 employees is one of new CEO Andy Jassy's first major initiatives since taking over for former CEO Jeff Bezos earlier this year. Positions will include engineering, research science and robotics roles.

The monster hiring spree will see Amazon bring on employees equal to more than 33% of Google's workforce and almost all of Facebook's workforce, according to CNBC. It'll also be a 20% increase to Amazon's current tech and corporate workforce, which currently numbers about 275,000.

But it's not just Amazon's in-house workforce that needs expanding. Bloomberg reported Wednesday that Amazon has found a unique solution for the labor shortage: recruit pot smokers.

That's right: despite the fact that driving while high on any substance is illegal, the company is advising its delivery partners to prominently advertise that they don’t screen applicants for marijuana use, according to emails between Amazon and contractors reviewed by Bloomberg.

Doing so can boost the number of job applicants by as much as 400%, Amazon says in one message to its driver-contractors (without explaining where it got the number). Conversely, the company says, screening for marijuana cuts the prospective worker pool by up to 30%. One delivery partner who stopped screening applicants at Amazon’s behest says marijuana was the prevailing reason most people failed drug tests. Now that she’s only testing for drugs like opiates and amphetamines, more drivers pass.

Other delivery companies are continuing to screen applicants, concerned about the insurance and liability implications in the many states where weed use remains illegal. They also worry that ending drug testing might prompt some drivers to toke up before going out on a route.

“If one of my drivers crashes and kills someone and tests positive for marijuana, that’s my problem, not Amazon’s,” said one, who requested anonymity to discuss the issue because Amazon discourages delivery company owners from speaking to the media.

And it doesn't look like Amazon has any plans to drop marijuana screens from its own hiring procedures. CEO Jassey commented publicly that the hiring binge will help Amazon "keep up with demand in retail, the cloud and advertising, among other businesses" like the company's plan to put satellites into orbit for broadband access.

“There are so many jobs during the pandemic that have been displaced or have been altered, and there are so many people who are thinking about different and new jobs,” Jassey commented.

The new CEO continued: “It’s part of what we think makes ‘Career Day’ so timely and so useful.”

Addressing recent concerns about treatment of employees and deflecting pressure to unionize, Jassey continued: “Everybody at the company has the freedom - and really, the expectation - to critically look at how it can be better and then invent ways to make it better.”

Amazon has been “very competitive on the compensation side," Jassey said. “We’ve led the way in the $15 minimum wage,” and for some states on average that “really, the starting salary is $17 an hour.”

Over 40,000 of the new jobs will be in the U.S., while others will be based in India, Germany and Japan. 

Separately, Walmart also announced this week it was going on a massive hiring binge, bringing on 20,000 supply chain employees as the big box retailer heads into the holiday season. Jobs will be a "mix of full-time and part-time, but will be permanent positions," according to CNBC. 

The company's blog said: "As our business continues evolving to meet the needs of today’s customers, having a robust supply chain is more important than ever. That’s why we’re excited to announce that our team is growing."

It continued: "We know that offering competitive pay is essential in order to build a network for the future. The average wage for supply chain associates is $20.37 per hour. We know that financial stability, health benefits, family support and career development opportunities are all critical factors to weigh when considering a job, and we aim not to just meet but exceed our associates’ expectations on each of these fronts. Every item on our store shelves and in our online inventory is there because of the combined efforts of our associates working in more than 250 supply chain facilities across the country."

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