Wal-Mart Replaces More Than 4,000 Employees With Machines

UpdateA Walmart director of corporate communications has made the following statement:

The headline and article state that Walmart “replaced more than 4,000 employees with machines.” It also says that the Cash360 machines we’ve put in some of our back offices have “eliminated jobs.” Neither of these statements are the case. When we went through the back office transformation last year, we shifted positions and labor hours to the sales floor. Every associate who previously held a back office position was offered a chance to stay with the company in a customer-facing role. Almost all of them chose to stay and many moved into supervisory or department manager positions. The distinction here is important, especially given that bringing associates closer to the customer is a key component of the business strategy we’ve outlined. In this case, automation in the back office allowed us to move more people onto the sales floor, where they are able to do what people do best – serve customers.

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The Wall Street Journal published a headline today that should strike fear into the heart of every crusaders in the fight for $15: “Robots Are Replacing Workers Where You Shop.”

As the story explains, Wal-Mart is replacing some of its non-customer facing workers with robots, like bookkeepers who were responsible for counting and storing the store's cash supply.

Last August, a 55-year-old Wal-Mart employee found out her job would now be done by a robot. Her task was to count cash and track the accuracy of the store’s books from a desk in a windowless back room. She earned $13 an hour.


Instead, Wal-Mart Stores Inc. started using a hulking gray machine that counts eight bills per second and 3,000 coins a minute. The Cash360 machine digitally deposits money at the bank, earning interest for Wal-Mart faster than sending an armored car. And it uses software to predict how much cash is needed on a given day to reduce excess.


‘They think it will be a more efficient way to process the money,’ said the employee, who has worked with Wal-Mart for a decade.”

Wal-Mart has a Cash360 machine in nearly all of its 4,700 US stores, eliminating thousands of jobs in what is yet another example of how automation will soon replace hundreds of thousands of jobs in the retail and food-service industries. Previously, we reported on McDonald’s “Experience of the Future” initiative, which one analyst calculates will lead to the replacement of 2,500 cashiers with self-order kiosks.

A Wal-Mart spokesman claims that most of these employees were moved into store jobs to improve service. But according to WSJ, more than 500 have left the company. The store accountant is now a greeter at the front door, where she still earns $13 an hour.

Automation isn’t motivated, as some liberals believe, by a desire to squeeze every last penny of profit out of a business. In reality, automation could be brick and mortar retailers’ last hope for survival.

Shopping is moving online, hourly wages are rising and retail profits are shrinking—a formula that pressures retailers from Wal-Mart to Tiffany & Co. to find technology that can do the rote labor of retail workers or replace them altogether.


As Amazon.com Inc. makes direct inroads into traditional retail with its plans to buy grocer Whole Foods Market Inc., Wal-Mart and other large retailers are under renewed pressure to invest heavily to keep up.”

Economists say retail jobs are ripe for automation. A 2015 report by Citi Research, co-authored with researchers from the Oxford Martin School, found that two-thirds of U.S. retail jobs are at “high risk” of disappearing by 2030.


“Self-checkout lanes can replace cashiers. Autonomous vehicles could handle package delivery or warehouse inventory. Even more complex tasks like suggesting what toy or shirt a shopper might want could be handled by a computer with access to a shopper’s buying history, similar to what already happens online today.


‘The primary predictor for automation is how routine a task is,’ said Ebrahim Rahbari, an economist at Citi Research. ‘A big issue is that retail is a sizable percentage of the workforce.’”

Nearly 16 million people, or 11% of nonfarm US jobs, are in the retail industry, mostly as cashiers or salespeople. The industry eclipsed the shrinking manufacturing sector as the biggest employer 15 years ago – and now they’re disappearing, too. Since January, the US economy has lost about 71,000 retail jobs, according to data from the Bureau of Labor Statistics.

The decline of retail jobs, should it occur on a large scale—as seems likely long-term—will make the labor market even less hospitable for a group of workers who already face limited opportunities for stable, well-paid employment,” said David Autor, an economist at the Massachusetts Institute of Technology.


Earlier this year, Beverly Henderson took a pay cut and gave up her health-care benefits when she left Wal-Mart in the wake of the back-office changes. “I’m 59 years old,” she said. “I never worked on the floor. I’ve always worked office positions and I had no desire.”

She is now an office manager at a local business she says can’t afford to give her the same perks or $16.75 an hour she made after 16 years with Wal-Mart. “I would have never left Wal-Mart. They were paying me decent,” said the Southport, N.C., resident. At Wal-Mart, Ms. Henderson managed store invoices, a job the company used technology to mostly centralize.”

The goal of automation isn’t to reduce a retailer’s staff, said Brian McCabe, an executive at a subsidiary of security firm G4S PLC. “We can optimize labor,” he said. “How a given retailer exercises that benefit or opportunity is up to them.”

However, the “optimizing labor” pitch is specious: There’s little evidence that it’s happening on a wide scale. If it were, the US labor force wouldn’t be struggling with the sharp declines in productivity witnessed in recent years. The decline suggests that, instead of freeing up workers for “higher value” tasks, automation has entered a phase where it's focused on the “low-hanging fruit” of low-skill retail and food-service jobs.

Treasury Secretary Steven Mnuchin has said he’s not worried about automation destroying American jobs, believing any real threat to be "50 or 100 years off," despite a report from PwC claiming that more than a third of US jobs are at “high risk” of being destroyed by automation by the early 2030s.

Well, Mnuchin certainly isn’t worried about losing HIS job to a robot - unless that robot once ran an investment bank called Goldman Sachs.