40% of US Walmart Workers to Get Raises: CEO

[Johnboy60]

Walmart is spending $1 billion to make changes to how it pays and trains US hourly workers as the embattled retailer tries to reshape the image that its stores offer dead-end jobs. As part of its biggest investment in worker training and pay ever, Walmart says that within the next six months, it will give raises to about 500,000 workers, or nearly 40% of its 1.3 million US employees. "We are trying to create a meritocracy where you can start somewhere and end up just as high as your hard work and your capacity will enable you to go," CEO Doug McMillon said during an AP interview this week at the company's headquarters in Bentonville, Ark. The company's average full-time wage will be $13 an hour, up from $12.85. For part-time workers, the hourly wage will be $10, up from $9.48.

Walmart to Give 40% of Its US Workers Pay Raises, Says CEO Doug McMillon

 

[dgiharris]

Giving $1 billion dollars to the worker bees sounds like a lot, but that is a raise of about 1% across the board.

However, share holders received $68 billion through dividends and stock repurchases.

http://cdn.corporate.walmart.com/66/e5/9ff9a87445949173fde56316ac5f/2014-annual-report.pdf

Walmart did $476 BILLION in sales

Their operating expenses (which includes salaries) amount to 19.3% of their sales which is about $26 billion dollars and their gross profit margin works out to 24.3%. Typical retailer is between 25% to 35% however Walmart figured out that you can be way cheaper if you have insane volume.

I can't get too excited about this when the workers get an increase of $1B but shareholders realize $68B in profits. However, that isn't exactly a fair apples to apples comparison.

The problem imo with business nowadays is that all decisions are made for "the shareholders". Employees are treated with the mindset of "Well you should bow down on your knees and be grateful you have a job". Walmart imo has an asymmetric distribution of their profits between employees and shareholders. In fact, Walmart counts on the government to subsidize them

Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance - Forbes

Walmart employees get around $6.2B in public assistance from the government. So why should they pay their employees an extra $6.2B when the government will take care of that for them. Then they can pass off that $6.2B to their shareholders. Actually, it's a genius strategy.

but there is some chicken and egg here, Walmart is the biggest because they are the cheapest. They are the cheapest because they cut costs (all costs) to the bone at every opportunity. This attitude transfers over to employee wages and also into a culture in which employees are regarded as fodder.

I'd be interested in Walmart's shrinkage numbers. I would guess that they lose more than $6B a year in shrinkage (employee theft). Typical shrinkage is 1% - 2% depending on employee discontent. And Walmart employees are pretty discontent, they aren't appreciated by management.

 

[Paulos23]

Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance - Forbes

Walmart employees get around $6.2B in public assistance from the government. So why should they pay their employees an extra $6.2B when the government will take care of that for them. Then they can pass off that $6.2B to their shareholders. Actually, it's a genius strategy.

This just drives me nuts as a tax payer. The company is making enough to pay these people enough so they don't have to get public assistance. Heck, I imagine if they just gave out 4B in rasies for their lowest employees that 6B would go down to under 1B.

They are scaming the US (and the tax payers) as well as their employees. They are not a good corporate citisen in my view.

 

[dgiharris]

This just drives me nuts as a tax payer. The company is making enough to pay these people enough so they don't have to get public assistance. Heck, I imagine if they just gave out 4B in rasies for their lowest employees that 6B would go down to under 1B.

They are scaming the US (and the tax payers) as well as their employees. They are not a good corporate citisen in my view.

When you give $6.2B to the poor it is called Welfare and looked down upon by the Right....

However, when you underpay your employees such that they need $6.2B in Welfare then transfer that $6.2B that you don't pay them to your shareholders that is considered good business

...They are scaming the US (and the tax payers) as well as their employees. They are not a good corporate citisen in my view.

When you talk about money making it's way to the poor, you are just a bleeding heart socialist.

But when you talk about that money making its way to the rich, then that is just good ol fashion Capitalism

 

[ThatRobGuy]

This just drives me nuts as a tax payer. The company is making enough to pay these people enough so they don't have to get public assistance. Heck, I imagine if they just gave out 4B in rasies for their lowest employees that 6B would go down to under 1B.

They are scaming the US (and the tax payers) as well as their employees. They are not a good corporate citisen in my view.

Okay...so if Walmart didn't exist, where would those folks work and how much do you think they'd be making?

Mom & Pop stores don't pay any better than Wal-Mart does, so if the industry giant was replace by a couple thousand smaller outfits, would the outcome end up being any different? (aside from the aspect that the large number of Americans who shop there would now have to pay more for their groceries from a local store)

 

[dgiharris]

Okay...so if Walmart didn't exist, where would those folks work and how much do you think they'd be making?

Mom & Pop stores don't pay any better than Wal-Mart does, so if the industry giant was replace by a couple thousand smaller outfits, would the outcome end up being any different? (aside from the aspect that the large number of Americans who shop there would now have to pay more for their groceries from a local store)

Not true, Costco pays there employees $20 an hour

Worker wages: Wendy's vs. Wal-Mart vs. Costco - Aug. 6, 2013

This burger place pays it's employees $15 an hour

A Burger Joint Pays $15 An Hour. And, Yes, It's Making Money : The Salt : NPR

it is a Corporate Exec "myth" that you have to pay your employees scraps in order to be profitable. It's just not true. There are many businesses that pay their employees well and still manage to thrive.

Fact is, rather then ensure better wages for their employees, Walmart (as well as most businesses) just funnel that money to their shareholders and top 1%-ers.

To be frank, I don't agree with this philosophy. The workers are the muscle, bone, and blood of the company body. The workers have a vested interest in the survival of the business. If the business dies, the workers lose their livelihood.

The shareholder does not have the same level of interest or commitment. The Shareholder has no loyalty whatsoever in the company and he will sell his interests the moment it becomes profitable. He'd gut the company and sell it piecemeal in a heartbeat if it meant a profit for him.

So I just don't understand a business model in which all decisions are done to favor someone who just doesn't care about the company to the same degree the employees do. The employees need the company to survive and live, the shareholder just regards the company as a item on an excel spreadsheet. A company NEEDS it's employees, a company does not need it's shareholders.

 

[cow451]

I wonder how many Wal-mart employees will get off Food Stamps, Section 8, etc. thanks to this generous raise.

 

[ThatRobGuy]

Not true, Costco pays there employees $20 an hour

Worker wages: Wendy's vs. Wal-Mart vs. Costco - Aug. 6, 2013

This burger place pays it's employees $15 an hour

A Burger Joint Pays $15 An Hour. And, Yes, It's Making Money : The Salt : NPR

it is a Corporate Exec "myth" that you have to pay your employees scraps in order to be profitable. It's just not true. There are many businesses that pay their employees well and still manage to thrive.

Fact is, rather then ensure better wages for their employees, Walmart (as well as most businesses) just funnel that money to their shareholders and top 1%-ers.

I agree that you don't have to pay your employee's scraps in order to be profitable, however, if you'll notice from your example burger joint that pays $15/hour...

When Moo Cluck Moo opened its first location almost two years ago, the starting pay for all workers was $12 an hour. The idea, according to co-founder Brian Parker, was to train everyone to multitask.

No one is just flipping burgers. All of the workers are expected to be jacks-of-all-trades: They bake buns from scratch daily, they house-make aioli and prepare made-to-order grass-fed burgers and free-range chicken sandwiches.

So, everyone there is making $12-15/hour, however, they're also doing twice the work of a person who just does a single task at Wendy's.

IE: ...they're more skilled, and they're working harder than the average fast food employee.

The article makes no mention of what happens to a moo cluck moo employee if it's determined that they don't possess the skills to multi-task at that level. (which it's likely that not everyone does/will)

 

[Paulos23]

Okay...so if Walmart didn't exist, where would those folks work and how much do you think they'd be making?

Mom & Pop stores don't pay any better than Wal-Mart does, so if the industry giant was replace by a couple thousand smaller outfits, would the outcome end up being any different? (aside from the aspect that the large number of Americans who shop there would now have to pay more for their groceries from a local store)

That is a fair point. But I have to point out there are large box stores that do treat their employee's better (better pay, better traning, better benifits, etc.) and are doing quite well because of this and are getting better quality employees out of this. Treating an employee as a valued member of a team can help them improve themselves (not all, but most I think). I know towns in the eastern part of my state where Wal-Mart is the major employer and many of them hate it becuase they can't afford to leave to find better work.

The fact that they are giving their shareholders billons that a fraction could have gone to employees that would be happier and more productive (hopefully) is what gauls me.

As for the cheepness of groceries, they are not that cheap where I live. And I rather go to a place with consistant value and good product. So I buy less of it, there is ways to streach it. People have gotten lazy (in general) in food preperation and storage (taking my own family as an example). And companies have taken advantage of that.

 

[dgiharris]

....
No one is just flipping burgers. All of the workers are expected to be jacks-of-all-trades:

I used to work fast food in high school, what you describe is standard. Everyone who works in the back of McDonald's can do a wide variety of jobs. Everyone who works fast food can "multitask".

It isn't that hard. Same thing at Walmart, plenty of the employees can "multitask" and are required to know various departments and jobs etc. Management doesn't care and regards it as a requirement. It's not unheard of for employees to be given EXTRA tasks and jobs and responsibilities with no increase in salary. Again, Management thinks employees should bow down on their knees and be grateful for having a job. So when you have this mindset, giving extra work and requirements to your employees without increasing their salaries is par of the course.

I've worked both sides of this. I started out at the bottom in a fast food place worked myself up to management before I went to college. I know how management regards the employees at the blue collar and white collar level (I did program management for a Fortune 500 company).

It's an elitist mindset that is a pervasive part of American Business and American White Collar Culture...

 

[ChristsSoldier115]

When you give $6.2B to the poor it is called Welfare and looked down upon by the Right....

However, when you underpay your employees such that they need $6.2B in Welfare then transfer that $6.2B that you don't pay them to your shareholders that is considered good business



When you talk about money making it's way to the poor, you are just a bleeding heart socialist.

But when you talk about that money making its way to the rich, then that is just good ol fashion Capitalism

No, they would tell you that the poor should get better jobs.

 

[ThatRobGuy]

I used to work fast food in high school, what you describe is standard. Everyone who works in the back of McDonald's can do a wide variety of jobs. Everyone who works fast food can "multitask".

It isn't that hard.

If that's the case, then what's the significance of the place mentioned in the article you linked?

The article seems to credit the "jack of all trades" ideology for their ability to pay higher wages...but if every fast food joint is doing the same, then there's nothing really special about what they're doing.

Aside from paying people more...but even the article acknowledges the fact:
"Now, in order to make this model work, customers have to pay a little more."

The economist in the article also mentions:
"These new chains appeal to people who are willing to pay more for food prepared from scratch."

That leaves us with an economic paradox of sorts, does it not?

If every fast food operated with the mentality of "well, we'll just pay the employees a little more and charge the customers a little more", wouldn't the two things cancel each other out in the grand scheme of things?

If you have $8 and a Big Mac costs $4...are you really in a better situation if you have $12 and a Big Mac costs $6?

You're buying power has essentially remained the same (1 hour of wages = 2 burgers)

 

[Galadriel]

I am conflicted about this.

As one who does work in retail, I do completely understand why retail workers and fast food workers shouldn't make a ton, because lets face it, it doesn't require a degree or is all that difficult. The multitasking can get crazy, but its not like it's rocket science.

On the other hand, I think anyone working a job full time should be able to afford the basics (ie a roof over your head, food, transportation, a means to get healthcare, a phone, etc.) without having to go on food stamps or welfare. It is kind of ridiculous if your workers cannot even afford the basics to live.

 

[ulu]

walmart sells for less

 

[dgiharris]

If that's the case, then what's the significance of the place mentioned in the article you linked?

The article seems to credit the "jack of all trades" ideology for their ability to pay higher wages...but if every fast food joint is doing the same, then there's nothing really special about what they're doing.

Aside from paying people more...but even the article acknowledges the fact:
"Now, in order to make this model work, customers have to pay a little more."

The economist in the article also mentions:
"These new chains appeal to people who are willing to pay more for food prepared from scratch."

That leaves us with an economic paradox of sorts, does it not?

If every fast food operated with the mentality of "well, we'll just pay the employees a little more and charge the customers a little more", wouldn't the two things cancel each other out in the grand scheme of things?

Actually, there is a third alternative that is anathema to our capitalistic culture and mindset. It's very obvious yet for some reason the solution is invisible to most of us.

The third alternative is that the business can opt to just make less money. No increase to the customer is required.

Wait, here me out. I'm not advocated anyone run at a loss or that the business run at 0% profit. No. Let's say you run a retail store, your store does $1.2B in sales per year, your gross margin for profit is 32%, your financials are rock steady and has been for years. You have plenty of reserves and operating capital etc etc. Your employees are hard working and you feel it's time for a significant raise.

You can simply opt to give them a raise, increase your operating expenses, and instead of having a gross profit margin of 32% it drops to 28%.

You are still profitable, your margins are still fine, cash flow is fine, it's simply that your business is making less profit overall.

I read the above idea/proposal in an article at Forbes (can't find it). At first I thought it was fairly naive and liberal but then I sat back and thought about it. If we had a mindset that put the business first (and by business I mean the business and employees and not so much the shareholders) and sought to keep our business healthy, it actually makes a lot of sense. Put more onus and profit sharing with your employees, have them put more skin in the game, etc.

 

[wing2000]

The CEO is actually announcing a 1.2% raise in a press release?

Walmart is spending $1 billion to make changes to how it pays and trains US hourly workers as the embattled retailer tries to reshape the image that its stores offer dead-end jobs. As part of its biggest investment in worker training and pay ever, Walmart says that within the next six months, it will give raises to about 500,000 workers, or nearly 40% of its 1.3 million US employees. "We are trying to create a meritocracy where you can start somewhere and end up just as high as your hard work and your capacity will enable you to go," CEO Doug McMillon said during an AP interview this week at the company's headquarters in Bentonville, Ark. The company's average full-time wage will be $13 an hour, up from $12.85. For part-time workers, the hourly wage will be $10, up from $9.48.

Walmart to Give 40% of Its US Workers Pay Raises, Says CEO Doug McMillon

 

[Tina W]

I think it's good, every bit helps, and hopefully it will be more in the future.

 

[gamewell45]

Walmart is spending $1 billion to make changes to how it pays and trains US hourly workers as the embattled retailer tries to reshape the image that its stores offer dead-end jobs. As part of its biggest investment in worker training and pay ever, Walmart says that within the next six months, it will give raises to about 500,000 workers, or nearly 40% of its 1.3 million US employees. "We are trying to create a meritocracy where you can start somewhere and end up just as high as your hard work and your capacity will enable you to go," CEO Doug McMillon said during an AP interview this week at the company's headquarters in Bentonville, Ark. The company's average full-time wage will be $13 an hour, up from $12.85. For part-time workers, the hourly wage will be $10, up from $9.48.

Walmart to Give 40% of Its US Workers Pay Raises, Says CEO Doug McMillon

Wow, how charitable of Walmart; giving 40% of their workers a whopping pay raise anywhere from .15 to .52 per hour!!! What about the other 60%?? What are they? Chopped liver?

 

[ThatRobGuy]

Actually, there is a third alternative that is anathema to our capitalistic culture and mindset. It's very obvious yet for some reason the solution is invisible to most of us.

The third alternative is that the business can opt to just make less money. No increase to the customer is required.

Wait, here me out. I'm not advocated anyone run at a loss or that the business run at 0% profit. No. Let's say you run a retail store, your store does $1.2B in sales per year, your gross margin for profit is 32%, your financials are rock steady and has been for years. You have plenty of reserves and operating capital etc etc. Your employees are hard working and you feel it's time for a significant raise.

You can simply opt to give them a raise, increase your operating expenses, and instead of having a gross profit margin of 32% it drops to 28%.

You are still profitable, your margins are still fine, cash flow is fine, it's simply that your business is making less profit overall.

I read the above idea/proposal in an article at Forbes (can't find it). At first I thought it was fairly naive and liberal but then I sat back and thought about it. If we had a mindset that put the business first (and by business I mean the business and employees and not so much the shareholders) and sought to keep our business healthy, it actually makes a lot of sense. Put more onus and profit sharing with your employees, have them put more skin in the game, etc.

That can be a viable option for some companies...my company does something similar to that (and many companies do) called profit sharing.

Based on the company's profit levels, the employees get a cut at the end of the year in a one-time check.

They used to do it monthly based on profit projections, however, that can be a dangerous model (as we found out) as we all got nice profit sharing checks from Jan-Sep...then in mid Oct that year, our 3rd biggest client went out of business and they wished they had some of that money back because we ended up in the red by a little for that year...so they figured it was safer move to a model where they waited until the year was over and all of the year end financial figures were in and then cut the checks in the following February.

Did that Forbes article give any insight as to an estimate of how many companies are in that solid of a financial situation where they would be able to safely pay that out throughout the year? If it's a case where only 10-15% of companies are that secure that they could safely increase operating costs by that much, then it's probably not a workable model as far as a widespread solution...just a nice perk for the people who are lucky enough to work there.

 

[dogs4thewin]

I wonder how many Wal-mart employees will get off Food Stamps, Section 8, etc. thanks to this generous raise.

probably depends since such programs are based on TOTAL family income.