How Walmart Transformed the Image of Its Hourly Workforce

September 17, 2018
Walmart, one of the original big box stores, currently employing close to 1.5 million people in the US and the largest private employer in the country, is taking steps to improve its reputation. In the past, the company suffered both political pressures as well as a tainted reputation, particularly from the mainstream media over its treatment of its employees. For years, Walmart has been criticized for its low pay and its lack of quality health benefits, ending coverage for employees working less than 30 hours per week. The company has always been known for its obsession cutting costs, and searching for ways to automate jobs to reduce labor costs.

But with so much bad press and a struggle to find hourly workers in a good economy, Walmart is making changes to treat employees better while still exploring ways to improve efficiency and quality. Earlier this year, the company raised its minimum wage for hourly employees to $11 an hour, its third minimum wage increase since 2005, as well as dolled out other bonuses and incentives to improve morale and the company's reputation, and increase the quality output of its workers.
Walmart took advantage of the tax savings and passed on some of it to the company's hourly employees.
Giving Back

Due to the tax act signed into law in December 2017 that lowers the corporate tax rate from 35% to 21%, Walmart took advantage of the savings and passed on some of it to the company's hourly employees. As the nation's single largest tax payer, the company cannot afford to not throw some incentives to its employees and announced in early 2018 that it will pay employees a bonus of $1,000 to employees with 20 plus years of service. Also, employees with between 15 and 19 years of service will receive $750, those with 10 to 14 years of work there will receive a $400 bonus, employees with five to nine years of experience get a $300 bonus, and any with two to four years of service, $250.

On Walmart's blog, Walmart President and CEO Doug McMillon announced to employees, "As you know, the President and Congress have approved a lower business tax rate. Given these changes, we have an opportunity to accelerate a few pieces of our investment plan. We plan to continue investing in you, in our customers through lower prices, and in our future--especially in technology to help improve your jobs and the experience for our customers."
The company spent nearly $4 billion acquiring e-commerce companies with thousands of workers.
Technology Over Human Capital

Even with the increasing positive changes Walmart is making for its employees, the company is investing in increasing its automation side of business including installing more self-checkout equipment and increasing its investments in its grocery-delivery business. The company spent nearly $4 billion acquiring e-commerce companies with thousands of workers. Walmart is also considering using personal shoppers to fill bags with online requested groceries which will be placed in crowdsourced driver's automobiles and delivered to customer's homes. Additionally, Handy, an online marketplace for home services, will assemble furniture and mount appliances and televisions for customers as requested.

Crowdsourced workers, also known as gig workers, choose the work they want to do or are proficient at, set their hours, provide their own tools, and are in essence, independent contractors. That means that Walmart is not responsible for paying employee's taxes and social security, or responsible for worker's compensation, vacation, sick time, or health insurance. The gig worker handles all of that and Walmart has an incredibly large pool of service providers to choose from for a variety of services. In addition to hiring contractor workers, the company is also experimenting with robotics, artificial intelligence (AI) and virtual and augmented reality to improve quality and efficiency for shoppers and reduce labor overhead. Many companies like Amazon, Target, and companies relying on data handlers have made the move to use AI to tackle these routine tasks with less mistakes than humans make.

Essential Changes

With the acquisitions of technologically advanced companies to assist with automation and AI, Walmart is faced with providing health care coverage for even more employees. One of the changes the company will be implementing to cope with the additional coverage costs for hourly workers is known as consumer-driven plans, where workers cover all their medical expenses out of pocket, up to a high deductible limit. Walmart will provide a medical-expense account to which the company contributes money to help offset these costs.

According to the Bureau of Labor Statistics, people between the ages of 16 to 24 account for 23% of retail workers. Unfortunately, not all within this age group will won't to, or can, adapt to the automated changes on the horizon for Walmart. And Uber and Lyft isn't an option due to the age restrictions of 21 to apply. While many believe this to be detrimental to this demographic of the retail workforce, some experts believe that Walmart may actually be creating a leaner, better-compensated foundation of employees who are augmented by gig workers and sophisticated automation processes.
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