Wal-Mart Boosts Workers’ Pay, Then Cuts Their Hours

Cost-cutting move suggests the tension between public relations and investor relations.

Six months ago, Wal-Mart CEO Doug McMillon announced that the retailer would boost the wages of nearly a half-million full-time and part-time workers and provide them with extra training.

Although Wal-Mart is in the midst of spending $1 billion to follow through on its commitment, the retail giant is now trying to rein in its spending by cutting the number of hours worked by many of its employees, Bloomberg reports.

“Regional [Wal-Mart] executives told store managers at the retailer’s annual holiday planning meeting this month to rein in expenses by cutting worker hours they’ve added beyond those allocated to them based on sales projections,” Bloomberg explained.

Wal-Mart started paying its workers a minimum of $9 per hour in April. All employees will earn at least $10 an hour by Feb. 1, 2016.

According to MoneyWatch, Wal-Mart claims the controversial move only impacts a “small number of stores” that were “significantly” overscheduling workers.

Though it recently lost its title as the largest retailer in the world to Amazon, Wal-Mart remains the biggest private sector employer in the United States.

Naturally, bumping its workers’ wages increased Wal-Mart’s expenses. But it hasn’t increased store sales.

“It’s crushing profits,” Brian Yarbrough, an analyst with Edward Jones, said in an interview with MoneyWatch.

The latest earnings report from the Arkansas-based retailer left investors disappointed.

Though it’s cutting worker hours, Wal-Mart said the move won’t impact its efforts to provide better customer service, an area the retailer needs to work on. Wal-Mart ranked dead last in all three retail store categories in the American Customer Satisfaction Index report.

Slashing workers’ hours after increasing their pay is a controversial move for the retail giant, earning it the ire of workers’ advocates.

Jess Levin, communications director for the union-backed Making Change at Wal-Mart campaign, issued this statement:

“We now have further evidence that Wal-Mart’s so-called ‘wage increase’ was nothing more than a cruel PR stunt. Hard-working Wal-Mart workers – many of whom did not even see a raise in pay – are having their hours cut all so Walmart can pad its bottom line. This is a disgusting statement on Wal-Mart’s values and how little it values its workers.”

Check out “Wal-Mart: Both the Most Popular and the Most Hated” retailer.

What do you think about Wal-Mart boosting its employees’ wages, then cutting the hours many of them work? Sound off below or on our Facebook page.

Stacy Johnson

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