14 ms·

Walmart Paid Its People More to Get Cleaner Stores and Higher Sales

219 points by finid 10y ago

jasode 10y ago
The HN user submitted the article with the editorialized title: "Walmart generated higher sales, profits by paying workers more, better training" Please don't mislead readers with false information. The original NYT title does not have the word "profits" in it: "How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More" This is a critical distinction because the details of the story actually explain that profits are down -- not up -- after paying their workers more: >The profit landscape is less sunny. Operating income for Walmart’s United States stores was down 6 percent in the most recent quarter, reflecting higher labor costs and other new investments. >In the short term, the Walmart experiment shows pretty clearly that paying people better improves both the work force and the shoppers’ experience, but not profitability, at least not yet.
- sctb 10y ago
  Thank you, we've updated the submission title.
- draw_down 10y ago
  Yes, let's not get too sanguine about the idea of paying workers more money.
- timbuckley 10y ago
  Agreed, OP's title is partly false.
- adevine 10y ago
  It's one thing to editorialize a title (though that's still wrong), but in this case the article says the exact opposite of the title. And, if the idea is that paying workers more is better for business, the fact that the lower profits are directly due to the higher wages is an argument against paying more.
- emp_zealoth 10y ago
  What are other new investments? They might be blowing more money on that, not increased wages
  - executive 10y ago
    Jet.com
- haalcion3 10y ago
  What you say is true, however I think despite there being levels of salaries/pay that are excessive for some employees and studies that indicate that there are better motivators than salary/pay, from what I'd read, Walmart had not been paying employees adequately or giving them adequate training, so anyone who dismissed what they did as "wrong" I think is misinterpreting arguments for high pay as "paying employees more is always right" vs. "in some cases, employers could be providing a better customer experience and encouraging sales and growth longer-term by paying their employees more." Also, please read: http://www.keithrull.com/blog/wp-content/uploads/2013/01/netflix_culture.pdf http://www.keithrull.com/blog/wp-content/uploads/2013/01/net... While it's not always applicable, paying more for the best is not a bad idea in dev and IT. Just be sure that you can survive up to 100% of the top people on your dev and IT teams getting replaced by ensuring you have good design, good code, good management, good training, and good documentation.
  - dilemma 10y ago
    People who work at Walmart work only for pay. That study is on a different type of worker.
- fizzbatter 10y ago
  I'm curious how much of it has to do with perception too. I avoid Walmart. I don't feel they treat their employees well, pay them well, or do anything well, fwiw. I much rather shop where i have the perception that the employees are happier. So, just because Walmart is paying them better, does not inherently mean they are happier OR that i know they are being treated better. I had no clue, and thusly have not changed my shopping habits at all.
  - aswanson 10y ago
    I avoid them also because the service is so poor. Even on a late weeknight, you can see 95 percent of the aisle closed and ridiculously long lines of people with full carts. Walmart does not treat their customers nor their employees well. Target cares more about the customer experience, imo.
  - code_sardaukar 10y ago
    If it helps, Walmart don't pay their employees poorly because they are less moral than other companies, but because they hire a different type of employee from, for example, Starbucks. If you happen to live in a place with Starbucks and Walmart, try visiting both and then ask yourself if the Walmart employee would stand a chance of getting a job at Starbucks.
ekianjo 10y ago
That's not revolutionary at all, despite what the New York Times claims. This was done, long, long ago already by Henry Ford (double the going wage for his workers): http://www.saturdayeveningpost.com/2014/01/03/history/post-perspective/ford-doubles-minimum-wage.html http://www.saturdayeveningpost.com/2014/01/03/history/post-p...
- dilemma 10y ago
  Not revolutionary but definitely radical in today's environment.
  - Zhenya 10y ago
    Not at all. Costco is a place that leaps to my mind. Also all the large tech players have done this to a large degree compared to non-tech who hire IT folks.
    - maxerickson 10y ago
      Costco and Walmart aren't really comparable. Costco stocks about 4000 usually larger, higher margin items in each of their stores. Walmart stocks more than 100,000 items in their stores, many of them with very low margins.
      - Zhenya 10y ago
        I was not comparing Costco v Walmart. I was responding to companies paying high wages in "today's environment"
        maxerickson 10y ago
        Right, but it isn't really clear that Costco pay's particularly high wages for the business it is operating.
        Zhenya 10y ago
sattoshi 10y ago
Would be interesting if anybody will follow them. Walmart is taking a hit for the american economy by giving it's workers more spending power, not something I would have ever expected from the retail giant.
- fizzbatter 10y ago
  I mean, they're not doing it for the American economy. They're experimenting to see how it affects their short and long term profits. Why do i believe they're not helping the American economy? Because firstly, that is not what they legally holden to (ie, the stock holders). Secondly, and most importantly, Walmart is costing the country a lot by not paying their workers a living wage. So a job at walmart means another person on government social aid program(s).
  - bzbarsky 10y ago
    > So a job at walmart means another person on government social aid program(s) As opposed to a person with no job (at Walmart or otherwise) who would then not be on said programs? That is, you are assuming that if Walmart paid more it would still have just as many employees. This assumption is not obviously true, and is likely false.
    - fizzbatter 10y ago
      I'm assuming exactly what i said. A job at walmart means another person on government aid, which is obviously (mostly) true. By (loose) definition, non-living wage employment results in needing assistance - ie government assistance. Whether you agree with it or not is another story. I'm not saying Walmart shouldn't exist because employees are on government assistance. I'm saying that Walmart is profiting off of this assistance.
- pmorici 10y ago
  They aren't doing it for the economy they are doing it because their sales were sliding as a result of poor customer experience. They realized that their focus on lowest possible labor cost left them in a position where they were getting the least ambitious bottom of the barrel labor. So they hypothesized that by training people in basic retail concepts, like how to stock a shelve to be visually attractive, offering people an above minimum wage and a path to better opportunities within the company that they could have a better trained workforce and better retain those people.
forgotpwtomain 10y ago
Yes, Walmart where a substantial (2-digit) percentage of their workforce requires food-stamps or other government subsidies to get by. [0] https://www.washingtonpost.com/posteverything/wp/2015/04/15/we-are-spending-153-billion-a-year-to-subsidize-mcdonalds-and-walmarts-low-wage-workers/?utm_term=.014e5668b588 https://www.washingtonpost.com/posteverything/wp/2015/04/15/... [1] http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/#6525d99e7cd8 http://www.forbes.com/sites/clareoconnor/2014/04/15/report-w...
- aianus 10y ago
  What do you expect them to do? They pay the minimum hourly wage or more, they don't have a responsibility to do any more. Frankly, if they unilaterally decided to pay more it would harm more poor people than it would help since all kinds of poor people shop at Walmart (and would have to bear the resulting higher prices) and rich people don't. Edit: added 'unilaterally'
  - forgotpwtomain 10y ago
    We already pay the cost of them paying less because we have to subsidize those employees via. government benefits. Why should the American people subsidize the profits of a corporation for years? And do you see why I think this headline of all things is ironic?
    - smm2000 10y ago
      People making more than 76k/year (~20% of workers in US) subsidize Walmart workers. Most people making less than 76k are getting subsidized - as they should be. I would prefer people doing productive work in Walmart getting subsidized than subsidizing people watching TV at home.
      - cabinguy 10y ago
        Right. But the part you are leaving out is that the children of Walmart's founder are among the richest people in the history of the world. We are subsidizing their wealth.
dwills 10y ago
The headline is false. Far down in the article, find this nuggest: "The profit landscape is less sunny. Operating income for Walmart’s United States stores was down 6 percent in the most recent quarter, reflecting higher labor costs and other new investments." And while employee headcount from 2008 is mentioned, there is no mention of the number of employees who have been let go to allow for paying high wages to the remaining workers. This article is yet another example of how the NY Times is a well-disguised propaganda arm of the Democratic Party.
- timbuckley 10y ago
  Double post, please delete one.
- intopieces 10y ago
  Sales and operating income are two different metrics. The headline is not false, it just doesn't say what you want it to say. Paragraph 10: "The results are promising. By early 2016, the proportion of stores hitting their targeted customer-service ratings had rebounded to 75 percent. Sales are rising again."
  - kgwgk 10y ago
    Maybe the person you reply to was confused by the original title in HN, which was "Walmart generated higher sales, profits by paying workers more, better training" (that's not the NYT's fault, tough).
- deleted 10y ago
  [deleted]
deleted 10y ago
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chinese_dan 10y ago
Higher wages means less jobs. So less people will be getting paid more. It will also mean less people will have more responsibility and longer hours. Employees that have higher skills will get the higher-paying job and the ones with lower skills will have even less of a chance to get a job.
- fizzbatter 10y ago
  It's sad that we even have jobs so below to poverty line, reliant on social aid programs to live. Someone working 40 hours a week should not be on government aid. Unfortunately for Walmart's terrible pay (and the terrible minimum wage in general), it's quite common. My fiancee has been steadily employed by a different retail chain and was on Medicaid/etc because of the useless minimum wage pay. Now we're double income (along with a moderate engineer pay), so she no longer needs that, thankfully.
  - chinese_dan 10y ago
    Walmart pays above minimum wage for nearly every position: https://www.glassdoor.com/Hourly-Pay/Walmart-Hourly-Pay-E715.htm https://www.glassdoor.com/Hourly-Pay/Walmart-Hourly-Pay-E715... "Someone working 40 hours a week should not be on government aid." This has nothing to do with Walmart, because they pay above minimum wage. If you have 3 kids (a personal choice) and have no choice but to work at Walmart (because of a lack of skills), and you are forced to get government assistance, you need to start re-evaluating your personal choices. The problem is that everybody has different needs and should make decision accordingly. Many people make bad personal choices and can't support themselves on the standard, minimum wage. The healthcare system does need to be fixed, but also needs to be more stress on personal responsibility. "My fiancee has been steadily employed by a different retail chain and was on Medicaid/etc because of the useless minimum wage pay." I have a hard time believing she was getting minimum wage. My Wife has worked at almost every single retail chain stocking and doing other various jobs and has always gotten paid more than minimum wage. All of the fast food chains and most retail stores in my area pay at least $2/hour above minimum wage. The reason is because market competition has pushed the wages up and they wouldn't be able to find many workers at anything less.
jonaf 10y ago
Meanwhile, Walmart can increase profits by simply hiring fewer workers (or laying off more). Allegedly, in 2012, Walmart was spending $12MM per second of transaction time in cashier wages alone[1]. [1] http://www.reuters.com/article/walmart-idUSL2E8E72FF20120307 http://www.reuters.com/article/walmart-idUSL2E8E72FF20120307
- benp84 10y ago
  That's per second of average transaction time, meaning one second times the total number of transactions (per year I guess?). Kind of a meaningless metric in my opinion.
  - jonaf 10y ago
    Good point, I glossed over that. I'm not sure I understand your interpretation properly, though. My interpretation was they took all of the transaction times, divided them by the total number of transactions, and then divided that number by their total expenditure in cashier personnel costs. I wouldn't go so far as to characterize this as "meaningless," but I will admit it's a little weird to measure your personnel costs in terms of dollars per second of the average time a given transaction takes. I think the idea is to shock people with a big number -- 12MM per second is shocking. However, the article doesn't explain that Walmart employs more people than any other company, world-wide[1] -- that's also a big number, and so when you divide the two, a much smaller number appears. The more interesting number, I think, is the total personnel costs versus the number of personnel -- some average or quantile that demonstrates, on a smaller scale, the ratio of personnel cost. Now, multiply that number to scale back up to number of transactions and you'll get a better representation of the personnel cost per transaction, without the oddball time axis. In fact, as I'm thinking about this, perhaps you're saying it's a meaningless metric because it makes no sense to compare dollars per average transaction-second to dollars for all cashiers, as the units aren't correlated and just give random values. [1] http://www.usatoday.com/story/money/business/2014/08/24/24-7-wall-st-biggest-employers/14443001/ http://www.usatoday.com/story/money/business/2014/08/24/24-7...
- crdoconnor 10y ago
  Something else they make you pay for: http://www.nakedcapitalism.com/2016/08/how-walmart-makes-you-pay-for-its-lack-of-policing.html http://www.nakedcapitalism.com/2016/08/how-walmart-makes-you...
danellis 10y ago
Doesn't HN have a policy on linking to articles behind a pay wall?
- Redoubts 10y ago
  I think the policy is to hit the "web" link next to the article.
  - danellis 10y ago
    "web" Wow. That's descriptive.
- jellicle 10y ago
  Sadly, no.
nickpsecurity 10y ago
Barely a blip about companies like Costco in this. Costco and Publix are my favorite in terms of using culture and compensation to get great results. Here's two links on them: http://www.huffingtonpost.com/2013/11/19/reasons-love-costco_n_4275774.html http://www.huffingtonpost.com/2013/11/19/reasons-love-costco... http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-mart-slayer-how-publixs-people-first-culture-is-winning-the-grocer-war/#5b321b976767 http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-... I think it's important in discussions like these to point out that Costco got to $100 billion a year without advertising by just paying people well and keeping management out of their way. The result was they did a great job with high customer service that spread business by word of mouth. Remember that this $100+ billion business started in 1983. Publix, founded in 1930, similarly minimized number and cost of management and executives while keeping large numbers of production workers whose personal stock rewards them based on company performance. Founder, like Costco's, still rich despite taking care of employees. The result is Publix is most profitable of all grocers with highest service level. Almost twice the margin of Walmart despite selling less stuff with very, conservative expansion. This shit isn't rocket science like biased NY Times and other corporate media would have you believe. Virtually every company that does these things outperforms those that don't. Toyota Production System probably being one with most media coverage. They rarely talk about most, though, since the owners of corporate media are themselves pulling outrageous amounts of money out of their semi-micro-managed companies. Any widespread change of the compensation situation in America to favor workers would pull money of out media managers' own pockets. So they seem to censor companies like Publix and Costco a lot while making a big fuss of how McDonalds might handle a raise. Sickening but makes rational sense given incentives of media executives (highest compensation) and business model (ad revenue from companies screwing workers). Don't bite the hand that feeds. It's that simple for vast majority of cases. As I always say, most of these medium to high margin firms could take care of and enable workers if a 1.6%, 2.2%, or 5.6% (IIRC...) margin company can do it. That those companies outperform micro-managed firms treating people like cogs despite less management & executive compensation means companies forgoing this strategy are doing it for reasons that have nothing to do with company performance. More like executive's paychecks and managers' egos. ;)
rdl 10y ago
I'm curious if anyone has done any analysis on the "other Walmart" phenomenon -- when there are two walmarts (or malls) in a given area, one of them (the older one, usually) rapidly gets far worse. Overall, it seems like it gets worse than it would have on its own, and worse than simply removing customers. What amazes me is that this happens even in suburban/rural locations where everyone drives to the stores, so going from the bad store to the good store is at most the direct-drive distance between them (sometimes just a couple of minutes). Why would anyone at all continue to go to the bad one?
Animats 10y ago
Costco pays much better than Wal-Mart.[1] "(Costco) pays workers an average of $20.89 an hour, compared with Wal-Mart's average hourly wage of $11.83." There's an article in Forbes on why Wal-Mart shouldn't raise wages to Costco levels. Costco has some advantages which don't involve hammering the employees. Their stores are plain warehouses. They only sell in bulk. They have a membership system, which not only encourages repeat visits, but cuts shoplifting way down. (Few shoplifters will come in, be photographed, and buy a Costco membership.) [1] http://www.businessinsider.com/why-walmart-cant-pay-costco-wages-2015-5 http://www.businessinsider.com/why-walmart-cant-pay-costco-w...
- savanaly 10y ago
  The most convincing argument I read about why Walmart pays their employees less other than the fact that they're greedy bastards is in [1]. "Costco has a tiny number of SKUs in a huge store -- and consequently, has half as many employees per square foot of store. Their model is less labor intensive, which is to say, it has higher labor productivity. Which makes it unsurprising that they pay their employees more." [1] https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-never-pay-like-costco https://www.bloomberg.com/view/articles/2013-08-27/why-walma...
  - CamelCaseName 10y ago
    Walmart and Costco have different business models, so it's a little unfair to compare them. (From the same article [1].) A better comparison may be Walmart vs. Target or Walmart vs. Zellers. Also, I would be very curious to see where the bulk of Walmart's SKUs are. I would expect a lot of them come from their large array of clothing. (every different size/color has its own SKU) "Wal-Mart's customers expect a very broad array of goods, because they're a department store, not a specialty retailer; lots of people rely on Wal-Mart for their regular weekly shopping. The retailer has tried to cut the number of SKUs it carries, but ended up having to put them back, because it cost them in complaints, and sales." [1] https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-never-pay-like-costco https://www.bloomberg.com/view/articles/2013-08-27/why-walma...
losteverything 10y ago
Another Wally post that gets many comments. Perhaps I am the only HN poster with actual working experience at wally - in the retail area too. So let me react to others' posts. The Walmart worker image I seem to read by comments are the sales floor and cashier type associate. Yes, there are Some that you wonder if they can be employed elsewhere. But that is not even close to a majority at the store I know about. Can a Walmart worker work at a Starbucks? Of course!! Can a Starbucks worker work at Wal-Mart? Sure. But retail sucks at times and I would bet more Starbucks -> Wally failures than the other way around. Many wally workers have been there decades. They earn 50 -125% more than the $10/hr publicised. First level managers Get the 48k required to avoid overtime when the new law takes effect. Since the new wage hike in my store there has not been any "ventilation" of out with the old and in with better employees. Its really really hard to hire anybody now. Heartbeat? You are hired. Promotions come at such a rapid pace it is truly wonderful to see. 20 year old given 4 Promotions in 18 months to become assist the manager at 48k. It happens. On another site Many posts about how rapidly promotions occur. Many store managers who make 130-250+ and more started out selling dirt alongside those "can't be employeed elsewhere" associates. In many cases it only takes 10 years to get to that level. Retail is its own form of servitude. It's hard. Takes work and a special person to succeed. Once off the clock you can not work. The "$10" pay more to employees was a brilliant move. The press ate it. I'll finish by my own transformation. I used to think Wally workers were in a class of their own. I worked at Costco too. There is no difference. There are substantially fewer Costcos than Wally. And Costco has much less need for employees. So you don't see the "can't work anywhere else" types.
- Namrog84 10y ago
  "Perhaps I am the only HN poster with actual working experience at wally" Nope. I'm sure there are others. I worked at Walmart for a bit making $7/hour. Stocking and other misc things, though never a cashier. When min wage was like $5.15 or $6.15. A lot has changed since then though. I now have a masters in CS and work at Microsoft.
  - losteverything 10y ago
    Different path for me Cps degree (pre Microsoft): work (overpaid) at large monopoly until cell phone penetration was 35% and displaced.
davidf18 10y ago
I don't fully understand how paying worker's more money makes the stores cleaner, have brighter lighting, or ensures that the shelves are stocked. Much of that has to do with spending money to remodel stores, paying more money to ensure that enough staff are employed to clean the stores (McDonald's is famous for cleanliness thanks to the leadership of its founder), and improving logistics and ensuring there is enough staff to put items on shelves. I'm glad people are getting more money, but I see a correlation with higher wages not a causation, and I don't see they changes in budgets for the stores which may account for the higher sales per store. According to Megan McArdle's article on Walmart and Costco [1], Walmart has one employee for every $211,000 in revenue while Costco has one employee for every $620,000 in revenue. For each dollar of revenue, Walmart hires 3 people compared to 1 for Costco, which has 107,000 employees. Thus, if Costco were using Walmart's metrics, they would hire about 215,000 additional employees, most of whom would need only a high school education, at that. Jobs that can be done with little education are the jobs that are being exported to Mexico and China. Interestingly, articles on paying higher wages never seem to focus on the number of people employed. [1] https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-never-pay-like-costco https://www.bloomberg.com/view/articles/2013-08-27/why-walma...
- tedmiston 10y ago
  Costco is selling wholesale / larger quantities to a different customer segment who is also spending more money though. I'm not sure comparing the two here makes sense to me.
  - davidf18 10y ago
    But many people do compare Walmart to Costco by comparing the relatively lower wages that Walmart pays compared to Costco (or Trader Joe's) [1] I'm simply demonstrating that Costco could hire more employees among the segment of people with little education and help to lower unemployment. Many people batter Walmart for not increasing wages for employees, but just as important is that Costco could hire many more employees and help to reduce unemployment. In my view, I think the writers should point out Walmart as an example of hiring 3 times more people per dollar of revenue than Costco (I don't know the figure for Trader Joe's) and thus, compared to Costco, doing much more to reduce unemployment. But you never read an article asking Costco to hire more people, only criticizing Walmart for not paying enough. [1] http://www.theatlantic.com/business/archive/2013/03/the-trader-joes-lesson-how-to-pay-a-living-wage-and-still-make-money-in-retail/274322/ http://www.theatlantic.com/business/archive/2013/03/the-trad...
drawkbox 10y ago
Another way is how WinCo does it, each employee can become an owner as it is majority employee owned, and it is a very well run place. Yes you can buy stock in Wal-mart or Costco and Costco has profit sharing, but there is something about owning a part of the company you work at that helps productivity, responsibility and caring what happens to the company. Personally I like shopping there because I know people there value it and more money is going to the workers. One example of how this may be better is a lower performing store that is still making a profit may stay open, other larger chains may remove stores and cut lower performing stores even though profit is made. Not a flawless system but owning shares, ownership and being a part of the company in this way makes the best work come out of skilled people. http://wincofoods.com/about/an-employee-owned-company/ http://wincofoods.com/about/an-employee-owned-company/
- shostack 10y ago
  How does the lower performing store work in that sense? Is it separate from the rest in some way? The reason low profit locations are often shut down is because there are often higher profit places to park that capital. So if I'm a shareholder employee of another location or HQ, I might wonder why we're not doing something that will grow the company even more. Of course this is where things like company values and mission statements come into play to ensure everyone is aligned. Not advocating that this is necessarily what I'd do in that situation, just curious how it is handled when it inevitably comes up.
Noos 10y ago
The issue isn't really the wages. You get poor quality workers when you make the majority of them have to work a second job, since you don't give them full time hours or benefits. Retail often can have 100% turnover or more in the span of a year because of this. The average retail job works their employees part time, from 15 or less hours to near full time, on a schedule which changes from week to week. Sometimes even keyholding staff are worked like this. You don't create employees loyal to your store when you do this, and especially if they also have to work an additional 5 or more hour shift before showing up at your job. Then you also get into tiny payroll budgets overall, preventing the store from hiring enough people to meet needs. So your 15 an hour worker can't clean the store, because he is on register all day, and he can't work extra hours because there is no budget. Or he does work them, but he has to take the next day off because he can't go over his schedule. These things among others create a culture where all you can do is punch in, survive the shift, and go home. You can't do a good job because the district managers don't want you to do a good job. they want you to meet their metrics, and most of it is about money and budget. They don't care much about clean stores, since they visit your store maybe once every few months. They do care that you spend more than your payroll, no matter whether you needed to or not. Honestly, retail sucks.
- losteverything 10y ago
  This. But I used to brush all Walmart workers with the same crusty paint brush (bought at Wally). Sure, i'd rather still be earning 6 figures. But when we did we all knew it could not last. What do you do? Leave early when the golden handcuffs are attached? Retail is my second job. What you describe is very spot on true. Yet probably the surprisingly largest difference is my lack of awareness prior to Wally that people did not have a supportive and wealthy home life. My retail peers suffer from lives I could not even imagine. Most of this group have no possible way of seeing parent(s) show them how to have a professional life. To excel. To build wealth. To dream big. That's the difference. Where my retail peers come from. Just as my sister in law would not be seen in a Walmart, my fellow co workers don't like to shop at the mall and enter macys or Lord and Taylor. Sears is ok.

219 points by finid 10y ago

The HN user submitted the article with the editorialized title: "Walmart generated higher sales, profits by paying workers more, better training" Please don't mislead readers with false information. The original NYT title does not have the word "profits" in it: "How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More" This is a critical distinction because the details of the story actually explain that profits are down -- not up -- after paying their workers more: >The profit landscape is less sunny. Operating income for Walmart’s United States stores was down 6 percent in the most recent quarter, reflecting higher labor costs and other new investments. >In the short term, the Walmart experiment shows pretty clearly that paying people better improves both the work force and the shoppers’ experience, but not profitability, at least not yet.

sctb 10y ago
Thank you, we've updated the submission title.
draw_down 10y ago
Yes, let's not get too sanguine about the idea of paying workers more money.
timbuckley 10y ago
Agreed, OP's title is partly false.
adevine 10y ago
It's one thing to editorialize a title (though that's still wrong), but in this case the article says the exact opposite of the title. And, if the idea is that paying workers more is better for business, the fact that the lower profits are directly due to the higher wages is an argument against paying more.
emp_zealoth 10y ago
What are other new investments? They might be blowing more money on that, not increased wages
- executive 10y ago
  Jet.com
haalcion3 10y ago
What you say is true, however I think despite there being levels of salaries/pay that are excessive for some employees and studies that indicate that there are better motivators than salary/pay, from what I'd read, Walmart had not been paying employees adequately or giving them adequate training, so anyone who dismissed what they did as "wrong" I think is misinterpreting arguments for high pay as "paying employees more is always right" vs. "in some cases, employers could be providing a better customer experience and encouraging sales and growth longer-term by paying their employees more." Also, please read: http://www.keithrull.com/blog/wp-content/uploads/2013/01/netflix_culture.pdf http://www.keithrull.com/blog/wp-content/uploads/2013/01/net... While it's not always applicable, paying more for the best is not a bad idea in dev and IT. Just be sure that you can survive up to 100% of the top people on your dev and IT teams getting replaced by ensuring you have good design, good code, good management, good training, and good documentation.
- dilemma 10y ago
  People who work at Walmart work only for pay. That study is on a different type of worker.
fizzbatter 10y ago
I'm curious how much of it has to do with perception too. I avoid Walmart. I don't feel they treat their employees well, pay them well, or do anything well, fwiw. I much rather shop where i have the perception that the employees are happier. So, just because Walmart is paying them better, does not inherently mean they are happier OR that i know they are being treated better. I had no clue, and thusly have not changed my shopping habits at all.
- aswanson 10y ago
  I avoid them also because the service is so poor. Even on a late weeknight, you can see 95 percent of the aisle closed and ridiculously long lines of people with full carts. Walmart does not treat their customers nor their employees well. Target cares more about the customer experience, imo.
- code_sardaukar 10y ago
  If it helps, Walmart don't pay their employees poorly because they are less moral than other companies, but because they hire a different type of employee from, for example, Starbucks. If you happen to live in a place with Starbucks and Walmart, try visiting both and then ask yourself if the Walmart employee would stand a chance of getting a job at Starbucks.

ekianjo 10y ago

That's not revolutionary at all, despite what the New York Times claims. This was done, long, long ago already by Henry Ford (double the going wage for his workers): http://www.saturdayeveningpost.com/2014/01/03/history/post-perspective/ford-doubles-minimum-wage.html http://www.saturdayeveningpost.com/2014/01/03/history/post-p...

dilemma 10y ago
Not revolutionary but definitely radical in today's environment.
- Zhenya 10y ago
  Not at all. Costco is a place that leaps to my mind. Also all the large tech players have done this to a large degree compared to non-tech who hire IT folks.
  - maxerickson 10y ago
    Costco and Walmart aren't really comparable. Costco stocks about 4000 usually larger, higher margin items in each of their stores. Walmart stocks more than 100,000 items in their stores, many of them with very low margins.
    - Zhenya 10y ago
      I was not comparing Costco v Walmart. I was responding to companies paying high wages in "today's environment"
      - maxerickson 10y ago
        Right, but it isn't really clear that Costco pay's particularly high wages for the business it is operating.
        Zhenya 10y ago

sattoshi 10y ago

Would be interesting if anybody will follow them. Walmart is taking a hit for the american economy by giving it's workers more spending power, not something I would have ever expected from the retail giant.

fizzbatter 10y ago
I mean, they're not doing it for the American economy. They're experimenting to see how it affects their short and long term profits. Why do i believe they're not helping the American economy? Because firstly, that is not what they legally holden to (ie, the stock holders). Secondly, and most importantly, Walmart is costing the country a lot by not paying their workers a living wage. So a job at walmart means another person on government social aid program(s).
- bzbarsky 10y ago
  > So a job at walmart means another person on government social aid program(s) As opposed to a person with no job (at Walmart or otherwise) who would then not be on said programs? That is, you are assuming that if Walmart paid more it would still have just as many employees. This assumption is not obviously true, and is likely false.
  - fizzbatter 10y ago
    I'm assuming exactly what i said. A job at walmart means another person on government aid, which is obviously (mostly) true. By (loose) definition, non-living wage employment results in needing assistance - ie government assistance. Whether you agree with it or not is another story. I'm not saying Walmart shouldn't exist because employees are on government assistance. I'm saying that Walmart is profiting off of this assistance.
pmorici 10y ago
They aren't doing it for the economy they are doing it because their sales were sliding as a result of poor customer experience. They realized that their focus on lowest possible labor cost left them in a position where they were getting the least ambitious bottom of the barrel labor. So they hypothesized that by training people in basic retail concepts, like how to stock a shelve to be visually attractive, offering people an above minimum wage and a path to better opportunities within the company that they could have a better trained workforce and better retain those people.

forgotpwtomain 10y ago

Yes, Walmart where a substantial (2-digit) percentage of their workforce requires food-stamps or other government subsidies to get by. [0] https://www.washingtonpost.com/posteverything/wp/2015/04/15/we-are-spending-153-billion-a-year-to-subsidize-mcdonalds-and-walmarts-low-wage-workers/?utm_term=.014e5668b588 https://www.washingtonpost.com/posteverything/wp/2015/04/15/... [1] http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/#6525d99e7cd8 http://www.forbes.com/sites/clareoconnor/2014/04/15/report-w...

aianus 10y ago
What do you expect them to do? They pay the minimum hourly wage or more, they don't have a responsibility to do any more. Frankly, if they unilaterally decided to pay more it would harm more poor people than it would help since all kinds of poor people shop at Walmart (and would have to bear the resulting higher prices) and rich people don't. Edit: added 'unilaterally'
- forgotpwtomain 10y ago
  We already pay the cost of them paying less because we have to subsidize those employees via. government benefits. Why should the American people subsidize the profits of a corporation for years? And do you see why I think this headline of all things is ironic?
  - smm2000 10y ago
    People making more than 76k/year (~20% of workers in US) subsidize Walmart workers. Most people making less than 76k are getting subsidized - as they should be. I would prefer people doing productive work in Walmart getting subsidized than subsidizing people watching TV at home.
    - cabinguy 10y ago
      Right. But the part you are leaving out is that the children of Walmart's founder are among the richest people in the history of the world. We are subsidizing their wealth.

dwills 10y ago

The headline is false. Far down in the article, find this nuggest: "The profit landscape is less sunny. Operating income for Walmart’s United States stores was down 6 percent in the most recent quarter, reflecting higher labor costs and other new investments." And while employee headcount from 2008 is mentioned, there is no mention of the number of employees who have been let go to allow for paying high wages to the remaining workers. This article is yet another example of how the NY Times is a well-disguised propaganda arm of the Democratic Party.

timbuckley 10y ago
Double post, please delete one.
intopieces 10y ago
Sales and operating income are two different metrics. The headline is not false, it just doesn't say what you want it to say. Paragraph 10: "The results are promising. By early 2016, the proportion of stores hitting their targeted customer-service ratings had rebounded to 75 percent. Sales are rising again."
- kgwgk 10y ago
  Maybe the person you reply to was confused by the original title in HN, which was "Walmart generated higher sales, profits by paying workers more, better training" (that's not the NYT's fault, tough).
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chinese_dan 10y ago

Higher wages means less jobs. So less people will be getting paid more. It will also mean less people will have more responsibility and longer hours. Employees that have higher skills will get the higher-paying job and the ones with lower skills will have even less of a chance to get a job.

fizzbatter 10y ago
It's sad that we even have jobs so below to poverty line, reliant on social aid programs to live. Someone working 40 hours a week should not be on government aid. Unfortunately for Walmart's terrible pay (and the terrible minimum wage in general), it's quite common. My fiancee has been steadily employed by a different retail chain and was on Medicaid/etc because of the useless minimum wage pay. Now we're double income (along with a moderate engineer pay), so she no longer needs that, thankfully.
- chinese_dan 10y ago
  Walmart pays above minimum wage for nearly every position: https://www.glassdoor.com/Hourly-Pay/Walmart-Hourly-Pay-E715.htm https://www.glassdoor.com/Hourly-Pay/Walmart-Hourly-Pay-E715... "Someone working 40 hours a week should not be on government aid." This has nothing to do with Walmart, because they pay above minimum wage. If you have 3 kids (a personal choice) and have no choice but to work at Walmart (because of a lack of skills), and you are forced to get government assistance, you need to start re-evaluating your personal choices. The problem is that everybody has different needs and should make decision accordingly. Many people make bad personal choices and can't support themselves on the standard, minimum wage. The healthcare system does need to be fixed, but also needs to be more stress on personal responsibility. "My fiancee has been steadily employed by a different retail chain and was on Medicaid/etc because of the useless minimum wage pay." I have a hard time believing she was getting minimum wage. My Wife has worked at almost every single retail chain stocking and doing other various jobs and has always gotten paid more than minimum wage. All of the fast food chains and most retail stores in my area pay at least $2/hour above minimum wage. The reason is because market competition has pushed the wages up and they wouldn't be able to find many workers at anything less.

jonaf 10y ago

Meanwhile, Walmart can increase profits by simply hiring fewer workers (or laying off more). Allegedly, in 2012, Walmart was spending $12MM per second of transaction time in cashier wages alone[1]. [1] http://www.reuters.com/article/walmart-idUSL2E8E72FF20120307 http://www.reuters.com/article/walmart-idUSL2E8E72FF20120307

benp84 10y ago
That's per second of average transaction time, meaning one second times the total number of transactions (per year I guess?). Kind of a meaningless metric in my opinion.
- jonaf 10y ago
  Good point, I glossed over that. I'm not sure I understand your interpretation properly, though. My interpretation was they took all of the transaction times, divided them by the total number of transactions, and then divided that number by their total expenditure in cashier personnel costs. I wouldn't go so far as to characterize this as "meaningless," but I will admit it's a little weird to measure your personnel costs in terms of dollars per second of the average time a given transaction takes. I think the idea is to shock people with a big number -- 12MM per second is shocking. However, the article doesn't explain that Walmart employs more people than any other company, world-wide[1] -- that's also a big number, and so when you divide the two, a much smaller number appears. The more interesting number, I think, is the total personnel costs versus the number of personnel -- some average or quantile that demonstrates, on a smaller scale, the ratio of personnel cost. Now, multiply that number to scale back up to number of transactions and you'll get a better representation of the personnel cost per transaction, without the oddball time axis. In fact, as I'm thinking about this, perhaps you're saying it's a meaningless metric because it makes no sense to compare dollars per average transaction-second to dollars for all cashiers, as the units aren't correlated and just give random values. [1] http://www.usatoday.com/story/money/business/2014/08/24/24-7-wall-st-biggest-employers/14443001/ http://www.usatoday.com/story/money/business/2014/08/24/24-7...
crdoconnor 10y ago
Something else they make you pay for: http://www.nakedcapitalism.com/2016/08/how-walmart-makes-you-pay-for-its-lack-of-policing.html http://www.nakedcapitalism.com/2016/08/how-walmart-makes-you...

danellis 10y ago

Doesn't HN have a policy on linking to articles behind a pay wall?

Redoubts 10y ago
I think the policy is to hit the "web" link next to the article.
- danellis 10y ago
  "web" Wow. That's descriptive.
jellicle 10y ago
Sadly, no.

nickpsecurity 10y ago

Barely a blip about companies like Costco in this. Costco and Publix are my favorite in terms of using culture and compensation to get great results. Here's two links on them: http://www.huffingtonpost.com/2013/11/19/reasons-love-costco_n_4275774.html http://www.huffingtonpost.com/2013/11/19/reasons-love-costco... http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-mart-slayer-how-publixs-people-first-culture-is-winning-the-grocer-war/#5b321b976767 http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-... I think it's important in discussions like these to point out that Costco got to $100 billion a year without advertising by just paying people well and keeping management out of their way. The result was they did a great job with high customer service that spread business by word of mouth. Remember that this $100+ billion business started in 1983. Publix, founded in 1930, similarly minimized number and cost of management and executives while keeping large numbers of production workers whose personal stock rewards them based on company performance. Founder, like Costco's, still rich despite taking care of employees. The result is Publix is most profitable of all grocers with highest service level. Almost twice the margin of Walmart despite selling less stuff with very, conservative expansion. This shit isn't rocket science like biased NY Times and other corporate media would have you believe. Virtually every company that does these things outperforms those that don't. Toyota Production System probably being one with most media coverage. They rarely talk about most, though, since the owners of corporate media are themselves pulling outrageous amounts of money out of their semi-micro-managed companies. Any widespread change of the compensation situation in America to favor workers would pull money of out media managers' own pockets. So they seem to censor companies like Publix and Costco a lot while making a big fuss of how McDonalds might handle a raise. Sickening but makes rational sense given incentives of media executives (highest compensation) and business model (ad revenue from companies screwing workers). Don't bite the hand that feeds. It's that simple for vast majority of cases. As I always say, most of these medium to high margin firms could take care of and enable workers if a 1.6%, 2.2%, or 5.6% (IIRC...) margin company can do it. That those companies outperform micro-managed firms treating people like cogs despite less management & executive compensation means companies forgoing this strategy are doing it for reasons that have nothing to do with company performance. More like executive's paychecks and managers' egos. ;)

rdl 10y ago

I'm curious if anyone has done any analysis on the "other Walmart" phenomenon -- when there are two walmarts (or malls) in a given area, one of them (the older one, usually) rapidly gets far worse. Overall, it seems like it gets worse than it would have on its own, and worse than simply removing customers. What amazes me is that this happens even in suburban/rural locations where everyone drives to the stores, so going from the bad store to the good store is at most the direct-drive distance between them (sometimes just a couple of minutes). Why would anyone at all continue to go to the bad one?

Animats 10y ago

Costco pays much better than Wal-Mart.[1] "(Costco) pays workers an average of $20.89 an hour, compared with Wal-Mart's average hourly wage of $11.83." There's an article in Forbes on why Wal-Mart shouldn't raise wages to Costco levels. Costco has some advantages which don't involve hammering the employees. Their stores are plain warehouses. They only sell in bulk. They have a membership system, which not only encourages repeat visits, but cuts shoplifting way down. (Few shoplifters will come in, be photographed, and buy a Costco membership.) [1] http://www.businessinsider.com/why-walmart-cant-pay-costco-wages-2015-5 http://www.businessinsider.com/why-walmart-cant-pay-costco-w...

savanaly 10y ago
The most convincing argument I read about why Walmart pays their employees less other than the fact that they're greedy bastards is in [1]. "Costco has a tiny number of SKUs in a huge store -- and consequently, has half as many employees per square foot of store. Their model is less labor intensive, which is to say, it has higher labor productivity. Which makes it unsurprising that they pay their employees more." [1] https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-never-pay-like-costco https://www.bloomberg.com/view/articles/2013-08-27/why-walma...
- CamelCaseName 10y ago
  Walmart and Costco have different business models, so it's a little unfair to compare them. (From the same article [1].) A better comparison may be Walmart vs. Target or Walmart vs. Zellers. Also, I would be very curious to see where the bulk of Walmart's SKUs are. I would expect a lot of them come from their large array of clothing. (every different size/color has its own SKU) "Wal-Mart's customers expect a very broad array of goods, because they're a department store, not a specialty retailer; lots of people rely on Wal-Mart for their regular weekly shopping. The retailer has tried to cut the number of SKUs it carries, but ended up having to put them back, because it cost them in complaints, and sales." [1] https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-never-pay-like-costco https://www.bloomberg.com/view/articles/2013-08-27/why-walma...

losteverything 10y ago

Another Wally post that gets many comments. Perhaps I am the only HN poster with actual working experience at wally - in the retail area too. So let me react to others' posts. The Walmart worker image I seem to read by comments are the sales floor and cashier type associate. Yes, there are Some that you wonder if they can be employed elsewhere. But that is not even close to a majority at the store I know about. Can a Walmart worker work at a Starbucks? Of course!! Can a Starbucks worker work at Wal-Mart? Sure. But retail sucks at times and I would bet more Starbucks -> Wally failures than the other way around. Many wally workers have been there decades. They earn 50 -125% more than the $10/hr publicised. First level managers Get the 48k required to avoid overtime when the new law takes effect. Since the new wage hike in my store there has not been any "ventilation" of out with the old and in with better employees. Its really really hard to hire anybody now. Heartbeat? You are hired. Promotions come at such a rapid pace it is truly wonderful to see. 20 year old given 4 Promotions in 18 months to become assist the manager at 48k. It happens. On another site Many posts about how rapidly promotions occur. Many store managers who make 130-250+ and more started out selling dirt alongside those "can't be employeed elsewhere" associates. In many cases it only takes 10 years to get to that level. Retail is its own form of servitude. It's hard. Takes work and a special person to succeed. Once off the clock you can not work. The "$10" pay more to employees was a brilliant move. The press ate it. I'll finish by my own transformation. I used to think Wally workers were in a class of their own. I worked at Costco too. There is no difference. There are substantially fewer Costcos than Wally. And Costco has much less need for employees. So you don't see the "can't work anywhere else" types.

Namrog84 10y ago
"Perhaps I am the only HN poster with actual working experience at wally" Nope. I'm sure there are others. I worked at Walmart for a bit making $7/hour. Stocking and other misc things, though never a cashier. When min wage was like $5.15 or $6.15. A lot has changed since then though. I now have a masters in CS and work at Microsoft.
- losteverything 10y ago
  Different path for me Cps degree (pre Microsoft): work (overpaid) at large monopoly until cell phone penetration was 35% and displaced.

davidf18 10y ago

I don't fully understand how paying worker's more money makes the stores cleaner, have brighter lighting, or ensures that the shelves are stocked. Much of that has to do with spending money to remodel stores, paying more money to ensure that enough staff are employed to clean the stores (McDonald's is famous for cleanliness thanks to the leadership of its founder), and improving logistics and ensuring there is enough staff to put items on shelves. I'm glad people are getting more money, but I see a correlation with higher wages not a causation, and I don't see they changes in budgets for the stores which may account for the higher sales per store. According to Megan McArdle's article on Walmart and Costco [1], Walmart has one employee for every $211,000 in revenue while Costco has one employee for every $620,000 in revenue. For each dollar of revenue, Walmart hires 3 people compared to 1 for Costco, which has 107,000 employees. Thus, if Costco were using Walmart's metrics, they would hire about 215,000 additional employees, most of whom would need only a high school education, at that. Jobs that can be done with little education are the jobs that are being exported to Mexico and China. Interestingly, articles on paying higher wages never seem to focus on the number of people employed. [1] https://www.bloomberg.com/view/articles/2013-08-27/why-walmart-will-never-pay-like-costco https://www.bloomberg.com/view/articles/2013-08-27/why-walma...

tedmiston 10y ago
Costco is selling wholesale / larger quantities to a different customer segment who is also spending more money though. I'm not sure comparing the two here makes sense to me.
- davidf18 10y ago
  But many people do compare Walmart to Costco by comparing the relatively lower wages that Walmart pays compared to Costco (or Trader Joe's) [1] I'm simply demonstrating that Costco could hire more employees among the segment of people with little education and help to lower unemployment. Many people batter Walmart for not increasing wages for employees, but just as important is that Costco could hire many more employees and help to reduce unemployment. In my view, I think the writers should point out Walmart as an example of hiring 3 times more people per dollar of revenue than Costco (I don't know the figure for Trader Joe's) and thus, compared to Costco, doing much more to reduce unemployment. But you never read an article asking Costco to hire more people, only criticizing Walmart for not paying enough. [1] http://www.theatlantic.com/business/archive/2013/03/the-trader-joes-lesson-how-to-pay-a-living-wage-and-still-make-money-in-retail/274322/ http://www.theatlantic.com/business/archive/2013/03/the-trad...

drawkbox 10y ago

Another way is how WinCo does it, each employee can become an owner as it is majority employee owned, and it is a very well run place. Yes you can buy stock in Wal-mart or Costco and Costco has profit sharing, but there is something about owning a part of the company you work at that helps productivity, responsibility and caring what happens to the company. Personally I like shopping there because I know people there value it and more money is going to the workers. One example of how this may be better is a lower performing store that is still making a profit may stay open, other larger chains may remove stores and cut lower performing stores even though profit is made. Not a flawless system but owning shares, ownership and being a part of the company in this way makes the best work come out of skilled people. http://wincofoods.com/about/an-employee-owned-company/ http://wincofoods.com/about/an-employee-owned-company/

shostack 10y ago
How does the lower performing store work in that sense? Is it separate from the rest in some way? The reason low profit locations are often shut down is because there are often higher profit places to park that capital. So if I'm a shareholder employee of another location or HQ, I might wonder why we're not doing something that will grow the company even more. Of course this is where things like company values and mission statements come into play to ensure everyone is aligned. Not advocating that this is necessarily what I'd do in that situation, just curious how it is handled when it inevitably comes up.

Noos 10y ago

The issue isn't really the wages. You get poor quality workers when you make the majority of them have to work a second job, since you don't give them full time hours or benefits. Retail often can have 100% turnover or more in the span of a year because of this. The average retail job works their employees part time, from 15 or less hours to near full time, on a schedule which changes from week to week. Sometimes even keyholding staff are worked like this. You don't create employees loyal to your store when you do this, and especially if they also have to work an additional 5 or more hour shift before showing up at your job. Then you also get into tiny payroll budgets overall, preventing the store from hiring enough people to meet needs. So your 15 an hour worker can't clean the store, because he is on register all day, and he can't work extra hours because there is no budget. Or he does work them, but he has to take the next day off because he can't go over his schedule. These things among others create a culture where all you can do is punch in, survive the shift, and go home. You can't do a good job because the district managers don't want you to do a good job. they want you to meet their metrics, and most of it is about money and budget. They don't care much about clean stores, since they visit your store maybe once every few months. They do care that you spend more than your payroll, no matter whether you needed to or not. Honestly, retail sucks.

losteverything 10y ago
This. But I used to brush all Walmart workers with the same crusty paint brush (bought at Wally). Sure, i'd rather still be earning 6 figures. But when we did we all knew it could not last. What do you do? Leave early when the golden handcuffs are attached? Retail is my second job. What you describe is very spot on true. Yet probably the surprisingly largest difference is my lack of awareness prior to Wally that people did not have a supportive and wealthy home life. My retail peers suffer from lives I could not even imagine. Most of this group have no possible way of seeing parent(s) show them how to have a professional life. To excel. To build wealth. To dream big. That's the difference. Where my retail peers come from. Just as my sister in law would not be seen in a Walmart, my fellow co workers don't like to shop at the mall and enter macys or Lord and Taylor. Sears is ok.