It's not just Tesla that is laying off workers en masse: more quietly, America's far more profitable companies are doing the same, and according to Bloomberg, Walmart which just a few days ago reported blowout earnings thanks to surging online sales, is eliminating the graveyard shift in hundreds of stores while expanding the use of a "labor-saving product sorting machine", in the latest efforts by the world’s largest retailer to cut down costs across its sprawling U.S. operations.
As part of the company's streamlining process, Walmart is eliminating the overnight shift that restocks the aisles at about 300 stores, and while it will aim to transition those employees to other hours, it will most likely end up firing most of them especially since the impacted stores are primarily smaller ones with lower annual sales or customer traffic.
At the same time, Walmart is accelerating its robotic rollout and is the expanding the use of a backroom conveyor system that takes boxes of products from trucks and scans them to speed their delivery to the shelves. The so-called “FAST Unloader” machine will be in 1,700 stores by the end of the year, up from 400 now, leading to even more mass layoffs of highly unskilled workers.
The moves show how Walmart, despite strong sales, is grappling to keep a lid on operating expenses -- especially as labor and transportation costs and e-commerce investments weigh on margins. The automation of everyday tasks like scrubbing floors and checking shelves for out-of-stock products can boost productivity and free employees up to interact with customers, Walmart has said.
This is just the beginning, of course, because as US CEO Greg Foran said at an October investor meeting, Walmart’s 4,756 U.S. stores will see "lots more change" and "Roles will change, how we work will change."
One such controversial change which prompted a social media furor was unveiled yesterday, is the transitioning of Walmart’s trademark store greeters to “customer hosts,” a role which allegedly has "broader responsibilities such as checking shopping carts for theft and handling refunds."
That move prompted a wave of criticism as some disabled greeters feared they would lose their jobs if they couldn’t handle the additional duties. On Thursday night Foran addressed the issue, releasing a memo that promised to give those greeters more time to find a new job than the usual 60 days.
Foran’s memo spoke of his need to make “tougher choices related to the roles our associates play and how we staff our stores. I never make these lightly.”
While the fate of Walmart's disabled greeters remains unclear, that of 3,500 co-managers who were sacked by the company in 2018 is, after Walmart’s U.S. announced major cuts to the company's headquarters staff (along with the thousands of recently departed co-managers). Meanwhile, Walmart is also growing, if only in Amazon's footsteps, after the retailer added roles, such as the 37,000 workers who currently pick and pack orders for its online grocery pickup service, which is offered in more than 2,000 locations and will expand to another 1,000 stores this year. Online retail, not surprisingly has emerged as a hopeful source of growth for the company: for eight consecutive quarters, Walmart’s U.S. sales growth has outpaced the rise of expenses like labor, a key metric that the company refers to as “leveraging expenses.”
In any case, with the retail sector shrinking fast, Walmart has no choice but to trim overhead, and the elimination of overnight shifts is part of that broader belt-tightening, and it has precedent: In 2017, Foran cut the shifts from Walmart’s Neighborhood Market stores, which are roughly the same size as traditional supermarkets. At the time, Walmart said that associates who had worked the overnight shift “told us they liked the ability to move to day shift.”
“If someone wants to keep their overnight shift, we will work with nearby supercenters or distribution centers to see if there are options to better fit their schedules,” Walmart said at the time.
It worked better on paper: Cierra Harrington, a single mother, told Bloomberg that her move off of the overnight shift wasn’t handled well. She had worked the overnight shift at the Walmart in Grantsboro, North Carolina for four years. In early December, she said the 25-person overnight shift was called in to a meeting and told that they had to transition to daytime hours. Harrington’s new assigned shift was 4 a.m. to 1 p.m. - a time slot she couldn’t manage because it would leave her 4-year-old daughter unattended. So she quit, and now works as a tax preparer. Blaming the company, Harrington said Walmart should have allowed for more flexibility, since “it’s not our fault that our overnight positions are going away,” Harrington, 22, said.
Of course, Walmart's motivation was not worker flexibility but cost-cutting, and it certainly achieved that, even though Walmart has said it expects 95% of employees impacted by the change to find new jobs with the company.
In response to questions from Bloomberg, Justin Rushing, a Walmart spokesman said that "as we continue to focus on making sure our associates are working when and where our customers need them most, we’re shifting some overnight work to daytime hours." He added that by shifting these hours, "we’re able to make sure more associates are on the floor during peak customer times, resulting in better customer service."
What he meant is that the company doesn't have the balls to fire thousands of workers, so instead it will do so passive-aggressively, forcing them to quit as the primary reason someone would work the night shift is if they can't work regular hours, which is precisely what Walmart is now demanding.
It also explains the new robots.
The unloading machines, meanwhile, reduce the number of people needed to unpack trucks and will help move products out of backrooms faster according to Bloomberg. The system prioritizes items that are currently out of stock, a vexing problem that Foran addressed at a meeting of Walmart’s suppliers this week.
In short, minimum wage workers are rapidly on their way out of the company which, with 2,300,000 workers, is America's single largest employer (after the US government of course), and the results will be dramatic as hundreds of thousands of people get a "passive aggressive" pink slip.