Trouble Coming To Walmart Nation?

Not so much for Walmart shareholders after the company beat estimates late in the week helping the stock (WMT) to close on Friday 7.7 percent off its low for the week.  MarketWatch notes the big-box retailer was helped by automation.

WalMart

Walmart talked about the significance of automation in an April post on its corporate site.

“Smart assistants have huge potential to make busy stores run more smoothly, so Walmart has been pioneering new technologies to minimize the time an associate spends on the more mundane and repetitive tasks like cleaning floors or checking inventory on a shelf,” said Elizabeth Walker, from Walmart corporate affairs.  – MarketWatch, Aug 17th

Walmart Nation

We don’t know how this helps Walmart nation, however.  The company is the largest employer in many states throughout the country.

When excluding public administrative bodies, Walmart is the largest employer in 22 states.  – USA Today

largest-employers_jan26

Walmart is also the world’s largest private-sector employer.   The company has over 100k companies in its supply chain worldwide and according to its 2019 annual report,

As of the end of fiscal 2019, Walmart Inc. and our subsidiaries employed more than 2.2 million employees (“associates”) worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. – Walmart 2019 Annual Report 

This compares to the 2018 Annual Report,

As of the end of fiscal 2018, Walmart Inc. and our subsidiaries employed approximately 2.3 million employees (“associates”) worldwide, with 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good and are continuing to improve. – Walmart 2018 Annual Report

Note the 100k year-to-year decline in employees, which appear to be the shrinking of their international workforce.   We couldn’t find any more current data on employment from the company’s quarterly reports.  Still looking, however.

 

Jobs At Big-box & Supercenter Retailers Are Collapsing 

We took a look at growth in retail payroll jobs over the past few years, which has been absolutely dismal.   Retail payrolls are down 176k jobs under President Trump while total private nonfarm payrolls are up 5.5 million.

Some Good News

The retail sector’s average hourly earnings (AHE) are up 9.66 percent during the Trump administration, an increase of over 70 percent from the prior 30-months (before Feb ’17) AHE growth rate.  These data should be kept in context as the retail wage gains begin at a relatively low base of around $18 per hour.

The data provides the basis to both those who argue pressuring companies to raise wages leads to layoffs whether it’s true or not, and to those who argue automation augments and makes labor more productive leading to higher real wages.   We are at the beginning of our vacation and are still in a holding pattern awaiting medical clearance for a 15-hour flight given our little episode last Christmas, so we are not going to get into it at this time.

Finally, the following is a chart of monthly and 12-month payroll changes for warehouse clubs and supercenters retailers, of which Walmart and Costco belong.

WalMart

Payrolls have been in virtual free-fall since 2017 as the warehouse clubs and supercenter retailers have lost over 40k jobs in the 12-month period since June.

Our sense automation is going to accelerate and jobs in Walmart nation are going to continue to disappear at an exponential rate.  We are not sure if the wage increases are sustainable without continued political and social pressure on management, which will probably lighten up as more and more jobs disappear.

Life is cruel and unfair sometimes and it is clear, at least to us, in this sector technological change is going to hurt those most vulnerable.  If you are reading this, you are part of the Lucky Sperm Club (LSC), and there but by the Grace of God go we.

Very few politicians have a plan to deal with it and most have their heads in the sand or in the clouds, or blaming others, for that matter.

Whatever the case, it is going to be complicated to resolve and class conflict will surely only increase.

By the way,  Costco and Walmart are on two entirely different planets as to how they treat their employees, in our superficial observation.  That’s a start, at least, treat your employees better it is good for business.

The commitment of executives is clear as well, as the pay ratio of W. Craig Jelinek, Costco’s CEO, to his median employee’s salary is far below that of some of his peers.

In fact, only Amazon’s pay ratio is lower, with Jeff Bezos electing to take a lower salary given his already enormous wealth.  – Real Money, March 8th

WalMart_4

Politics

How this all plays out politically, we don’t know.   The Democratic candidate, Andrew Yang,  can probably get some traction out of it as he is the only one who seems to understand it and is at least trying to address it with the idea of a universal basic income (UBI).

One thing is for certain, the administration understands the political blowback as it is taking place in many of the home states of their base and is blaming Amazon and their non-BFF, Jeff Bezos, for the Retailgeddon, which hardly applies to Walmart, in our view.

WalMart_2

US Treasury Secretary Steven Mnuchin said that Amazon “destroyed the retail industry across the United States” and that it’s appropriate for the attorney general to investigate the company alongside other tech giants in the sweeping antitrust review that the Justice Department announced yesterday. “There’s no question they’ve limited competition,” Mnuchin told CNBC’s Squawk Box. – The Verge, July 24th

Stay tuned, folks, this is one to watch closely.

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30 Responses to Trouble Coming To Walmart Nation?

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  12. kevin coleman says:

    i think one needs to look at the reality of walmart! how did this nickel and dime store get its start? walmart has been successful off the slave labor of china and import shipping rates. walmart is responsible for losing countless jobs to china as manufacturing was shifted to china around 1980’s? hundreds of thousands of manufacturings jobs and companies went with this migration exodus to red china! now one small cia front corporation more then likely will play a significant role in the buy sell antichrist 666 system of the coming jared kushner empire!

    my plan calls for a 100% ban on all and any red china product directly or by using drop shipping theory! america must retool its manufacturing now! from agriculture to zoos this nation needs new leadership not pedophiles satanists of the past 200 years but new in using the law of God, do unto others as you want them to sell you quality products at discount prices! open a walmart in toontown discount shelf prices, after you shut down the competition millions of stores of mom and pop shops.

    then raise prices! i believe God will send us a real believer not a corporate commercial christian, no, but a man who has a record of obedience a history of public services. i hope we can get him before the curtain has raised on this tribulation period that will test the world who is God and who is not?

    • TH says:

      Again, continued misrepresentation of data, with an obvious bias. Pointless drivel.

    • Anonymous says:

      the original owner is a deep state operative and walmart is a cia front for to overthrow of america. just look up the connections between the fed gov and walmart, you would be shocked

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  14. Mike says:

    Will if they are replacing employees with robots then they better find a replacement for me as a customer because I will not be shopping there then !!!!

    • TH says:

      So, you don’t bank with institutions that have ATM’s? You don’t use automated car washes? You don’t buy cars from factories that use robotics? Pointless argument.

  15. Anonymous says:

    I have noticed they took out all but 4 cashiers (workers) replaced others with scan and go. It is terrible who wants to scan 150 items yourself. The lines for the ,4 by the way 2 of the 4 are 20 or less items are so long. people complaining. The first time I complained they told me we can’t get people to work for us they call off all the time. But when I talk to my closer cashiers they say not true it is because they don’t want to pay for health care. So I go out of my way to the next farther away Walmart get my order start talking to the cashier telling her how Happy I am that they are here instead of that stupid scan and go and she says well don’t get used to it they told us it’s coming here to.

  16. TH says:

    Fake news article. Opinion based, no merit and f facts to support the opinion.
    People continue to use old mind sets to criticize WM for pay, benefits and treatment of employees. Most of these opinions are repeated from what they have heard, as they are clueless to the reality of what goes on within the business. Just like the left leaning media, read everything, believe none of it, andb dig deep to get the real facts.
    Waste of time article.

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  20. Rumplestiltskin says:

    What everyone seems to be forgetting is that nothing has value except that which human labor has given it. If a business robotizes and puts humans out of work, it is essentially killing the goose that lays their golden eggs, (Middle class working stiffs). When enough people are put out of work (so that investors can make money off that working class), there will be less money velocity and thus we are now seeing the first steps of a collapsing society.

    If humans don’t work, they don’t eat and will eventually end up on the street, but as long as corporations continue to skim their profits off the backs of the working class, this will not get better for our society. This is also the real reason why societies collapse. If work is no longer available because it has all been robotized, just where do you people out there in La La Land expect the working class to go?

    What is sad is the elite of Wall Street do not care in the least that they gain their millions off the backs of working men and women and eventually those downtrodden will force capitulation of corporations into paying their fair share of their taxes. Lowering the taxes on the rich never and I mean never trickles down into creating jobs for that working class, nor give those who are working a raise, so they can contribute to society in a meaningful way by spending their money which also creates jobs.

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