Wal-Mart and Low Wages: What Can't Go On Forever, Won't
This was predictable.
Earlier this year, news arose that Wal-Mart 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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The article Wal-Mart and Low Wages: What Can't Go On Forever, Won't originally appeared on Fool.com.Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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