Walmart's New Staffing Strategy: Hiring Mostly Temps

Walmart storeBy Dhanya Skariachan and Jessica Wohl

Walmart Stores Inc. has in recent months been only hiring temporary workers at many of its U.S. stores, the first time the world's largest retailer has done so outside of the holiday shopping season.

A Reuters survey of 52 stores run by the largest U.S. private employer in the past month, including one in every U.S. state, showed that 27 Walmart stores were hiring only temps, 20 were hiring a combination of regular full, part-time and temp jobs, and five were not hiring at all. The survey was based on interviews with managers, sales staff and human resource department employees at the stores.

The new hiring policy is to ensure "we are staffed appropriately," when the stores are busiest and is not a cost-cutting move, said company spokesman David Tovar. Temporary workers, he said, are paid the same starting pay as other workers. Using temporary workers enables the company to have adequate staff on busy weeknights and weekends without having to hire additional full-time staff.

More: Walmart vs. Costco: How Do They Really Compare?

Tovar said fewer than 10 percent of its U.S. workforce is temporary -- or what the company internally calls "flexible associates" -- compared to 1 to 2 percent before 2013. The majority of its workforce is still regular full-time staff, he said.

Walmart U.S. Chief Executive Bill Simon also confirmed that the company is hiring more temp workers. "Their hours flex by the needs of the business from time to time," he told reporters the day before Walmart's annual meeting last week.

The hiring strategy could save Walmart money by trimming labor costs at a time when its margins remain under pressure. Many consumers are still struggling given a high jobless rate and lack of income growth, leaving retailers of everyday goods with little pricing power, according to other company CEOs and benefits experts. Competition from dollar stores, other big box discount chains and grocery stores is also intense.

It also could set an example for some other companies as they look for ways to cushion themselves from a potential rise in healthcare costs next year as a result of President Barack Obama's health care reforms, according industry experts and retail executives. Tovar said that the move wasn't related to these reforms, commonly known as Obamacare, but he did acknowledge that it could take a year or more for temporary workers to receive health care benefits. Turnover in retail often occurs within the first few months.

More: 10 Highest-Paying Temp Jobs

Fewer Full-Timers
Walmart's U.S. staffing has remained relatively flat even as more stores have opened in recent years. At the end of fiscal 2013, Walmart had "more than 1.3 million" workers in the United States, the majority of them at 4,005 Walmart U.S. stores, compared with "approximately 1.4 million" workers in the United States at the end of fiscal 2009, the majority of them at 3,656 Walmart U.S. stores, according to the company's annual filings for both years.

The temporary workers are often being hired on 180-day contracts, according to the survey of Walmart stores. The temps could eventually be hired for a regular full or part-time job or they could reapply for their temporary position, the Walmart staff said.

Temp workers typically have a completion date after which they have to reapply for work, but part-time employees work fewer hours than full-time workers indefinitely.

"Full-time people are getting slimmer and slimmer," said a supervisor at a store in North Carolina, who asked not to be named, as did other store-level employees who were interviewed for this story, because she is not authorized to talk to the media. She said that the five new employees hired this year at the store are all temps and hours of existing employees are being cut.

"Everybody who comes through the door I hire as a temporary associate," said a store manager in Alaska, who asked not to be identified. "It's a company direction at the present time."

"Long-term associates are particularly distraught by this short-term hiring as many are looking for more hours and full-time work," said Mary Pat Tifft, a member of the Organization United for Respect at Walmart, or OUR Walmart, a group of current and former Walmart employees campaigning for better wages, hours and benefits. It does not define itself as a union, although its members do pay $5 monthly dues. OUR Walmart is part of the United Food and Commercial Workers International Union.

More: Walmart Workers Pessimistic About The Company's Future

Weak Labor Market
The move to hire more temps throughout the year has not caught on with Walmart's rivals such as Target, Costco and Sears, all of which said that they are hiring full time and part-time employees but don't plan to hire temps outside of seasonally busy periods like the holidays.

"I don't know about others' practices or philosophies, but I can say that Costco's general hope and expectation when hiring an employee is to make it a long-term relationship," said Patrick Callans, vice president for human resources and risk management at Costco.

Only discount chain Dollar General Corp. told Reuters it does hire temp workers year-round but declined to comment on the reasons.

Labor market experts said that the relatively high U.S. unemployment rate, which was 7.6 percent in May, and the large number of people not counted because they have left the labor force at least temporarily, does give companies like Walmart the conditions to attract temp workers. That may be less the case if the economy continues to improve and the jobless rate falls.

Hiring temps is "one strategy" that retailers could use to mitigate the potential rise in health-care costs due to the new healthcare care law, said Neil Trautwein, a health-care lobbyist for the National Retail Federation. "Another strategy could be employing more part-time employees."

Walmart already has begun to change the health-care plans it provides workers. Last November, it said that newly hired part-time employees would have to work a minimum of 30 hours a week, up from 24 hours previously, before they can qualify for health coverage.

More: Ex-Walmart Worker To Get Her Lawsuit Before Supreme Court

Its U.S. employees also faced an 8-36 percent increase in premiums in 2013, the company said at the time, prompting some workers to forego insurance. The majority of eligible employees at Walmart sign up for the company's health insurance. Under the reforms, large companies must next year offer healthcare to 95 percent of employees who work more than 30 hours a week or pay a penalty of $2,000 per worker for the entire workforce.

When the work hours are so variable that the employer is not certain whether an employee qualifies, they can elect to determine eligibility by measuring hours during a period of up to 12 months, a strategy that Walmart said it plans to use. Temp workers may therefore have to wait a year -- provided they are still employed at the company -- to find out if they are eligible.

"A temporary worker may never get that far," said Barbara McGeoch, a principal and health benefits expert at consulting firm Mercer's legal, regulatory and legislative group. "They may never get the coverage."

(Reporting by Dhanya Skariachan in New York and Jessica Wohl in Chicago; additional reporting in New York by Caroline Humer; editing by Jilian Mincer, Martin Howell and Tim Dobbyn.)

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drlolipop2

Wow, where are the moronic comments from anti-worker, anti-union, pro-fascism Koch Brothers-worshipping baggers talking about how this is good for America? Have even the idiotic trailer park Republican baggers determined that masturbating to pictures of Walmart executives isn't how they want to spend every waking moment of their lives any more? Or do Koch Brothers just not pay bagger monkeys to type pro-corporatism/anti-worker gibberish on Sunday nights?

June 17 2013 at 12:47 AM Report abuse rate up rate down Reply
Tim Horton

Well, this is new news. What do these large corporations think? Do any of them really believe this is a good thing? Wal-Mart and many, many large and small corporations have been doing this for over a decade. This is not new news just more of the common way of doing business. Purchase and resale of off-shore goods is at an all time high and continues to grow. Or even worse, some of these companies manufacture goods outside of the USA to pay even worse compensation to really, really desperate counties. I read some of the other comments and I did see one positive comment. The positive comment came from someone that hopes he sees lower prices to save more money and he also thinks this strategy will work well in his own business. It is this type of thinking that will eventually end up with God turning His back on a nation He blessed. I know, there will be a bunch of angry comments about bringing up God and that is ok, fools have free will to. Are actions like this company and a bunch of other large companies taking, in the name of improvement, caring about do as you would have it done unto yourself? No and this is nothing to wink at. Everyone that cares at all should be speaking up. The legal covering of corporations keeps these greedy folks from personally being exposed so maybe the only way to let companies like Wal-Mart know that their moral standards have hit bottom and their responsibility to be fair to their fellow man can be changed. How? Very simple my friends. Buy nothing that is not made in America and if the same products are available from your smaller local businesses, spend the extra pennies, and yes sometimes dollars, with them. Companies like Wal-Mart and even Starbucks come blazing into a community and build to many stores and facilities without any regard for the community the damage. Then, if volume is too low they simply close facilities and at times leave gigantic buildings and parking lots littering a community. These companies get huge benefits from city and county and even state governments in the name of job creation but its all lies. There is absolutely no way that with proper management that these companies cannot manage employees and profit margins better without using the temporary tactic of profit by greed. I am sorry but these types of manipulation of people looks like legal slavery to me. No matter what, justice will be served.

June 16 2013 at 4:50 AM Report abuse rate up rate down Reply
jem.pate

mY WIFE WORKS FOR WALLY WORLD, AND IN THE 9 YEARS SHE'S BEEN THERE AND THE MORE i KNOW ABOUT WALLY WORLD, I WOULD'T WORK THERE..

June 15 2013 at 5:14 PM Report abuse rate up rate down Reply
uscongressed

America built Wal-Mart. When we notice the exploitation, unethical practices, disregard for law, and general dishonesty at Wal-Mart, we are looking into our mirror of capitalism.

June 15 2013 at 12:06 PM Report abuse rate up rate down Reply
itooso

Walmart will just hire people to work 29.9 hours, thay way they don\'t have to pay health insurance, saving even more for themselves, like if that company did\'nt already have enough, how greedy can they get.

June 15 2013 at 8:16 AM Report abuse rate up rate down Reply
abogada36

Americans are selling their souls for low prices. You won't catch me setting foot in there.

June 15 2013 at 8:15 AM Report abuse +1 rate up rate down Reply
itooso

They only want people who have no brains. Zombies will work for free. :D

June 15 2013 at 8:12 AM Report abuse +1 rate up rate down Reply
freekmeout

walmart isnt the only retail store company doing this. and other businesses are now hiring temps and paying them less than the full timers. not happy about whats going on at all.

June 15 2013 at 3:26 AM Report abuse rate up rate down Reply
1 reply to freekmeout's comment
Michele

This is all result of Obama and Obamacare.....

IF no one believes this, then watch and see what happens in 2014. Hitler has to be voted out of office.

June 15 2013 at 4:42 AM Report abuse rate up rate down Reply
weirdo

If it means they'll have more than 3 registers open on a Friday evening, I'm all for it.

June 15 2013 at 1:22 AM Report abuse -1 rate up rate down Reply
gerrygulb

If you hire temps you don't have to give any benefits.

June 14 2013 at 11:17 PM Report abuse +1 rate up rate down Reply

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