Wal-Mart and Low Wages: What Can't Go On Forever, Won't

This was predictable. 

Earlier this year, news arose that Wal-Mart (NYSE: WMT  ) had cut its workforce so low that it had trouble stocking shelves. The New York Times wrote: 

Walmart, the nation's largest retailer and grocer, has cut so many employees that it no longer has enough workers to stock its shelves properly, according to some employees and industry analysts. Internal notes from a March meeting of top Walmart managers show the company grappling with low customer confidence in its produce and poor quality. "Lose Trust," reads one note, "Don't have items they are looking for -- can't find it."

"This can't last," I wrote in response. "So it won't." Employers spent the last three decades squeezing employees. There's growing evidence that they've squeezed as tight as possible, to a point where it is backfiring on business and productivity. 

Well, here's the update

Wal-Mart Stores is moving 35,000 part-time workers to full-time status and is elevating another 35,000 to part-time from temporary after struggling to keep shelves stocked with too few employees in the past year.

Also, about 55,000 seasonal workers will be hired for the holiday season, up from 50,000 last year, the Bentonville, Arkansas-based retailer said today in a statement. The 70,000 workers whose employment statuses are being elevated will keep their new positions after the holiday season ends, said Kory Lundberg, a Wal-Mart spokesman.

Bare-bones employment couldn't last. So it didn't. 

Is this a one-off example, or a template of a new trend? I'm more optimistic than most that it's the latter. 

The last century has been punctuated by low-wage growth (early 1900s) giving way to high-wage growth (mid-century) to low growth again (last two decades). These things move in cycles. Every time I read a story about rock-bottom wages, people working two jobs barely being able to support themselves, rising part-time work and record corporate profit margins, I get the feeling that we're close to the next cycle.

A lot of people have asked how to boost middle-class wages. The best way -- the only way, I think -- is to get to the point where low wages not only hurt workers but also the companies they're working for. That's when things start to shift. It's what happened to Wal-Mart, and it'll happen to other companies before long. 

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  • Report this Comment On September 26, 2013, at 5:35 PM, cmalek wrote:

    "Bare-bones employment couldn't last. So it didn't. "

    But the shelves still show big holes where merchandise ought to be. The 4 or 5 regular WalMarts I visit have shelf stocking problems. The 3 Super WalMarts not as much but shelves do have empty spots. Also I have not noticed any added staff.

  • Report this Comment On September 26, 2013, at 5:46 PM, Risky88 wrote:

    Wal-mart still has low wages

    time will tell if your correct

    but I think retail will always to work in

  • Report this Comment On September 26, 2013, at 5:53 PM, kathyklok wrote:

    I will never, ever shop at Wal-Mart, the crap kingdom of retail. Everything is made in China and is absolute junk, My best friend has worked there for years and has been suffering from back strain and they won't transfer her to a less stressful position, after 20 years of employment. Disgusting.

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