Walmart, the world’s largest private employer, announced on Thursday that it was raising its starting hourly wage from $9 to $11 per hour, introducing a more generous parental leave policy, and offering one-time cash bonuses based on length of service for its US workforce. CEO Doug McMillon revealed the changes in a note to employees:
[W]e’re raising our starting wage to $11 an hour for Walmart U.S., Sam’s Club, Supply Chain, eCommerce and Home Office hourly associates effective in February. We’re also providing a one-time bonus to hourly associates that pays a larger amount the longer you’ve been with our company. Associates that don’t benefit from the new starting wage increase are eligible for the bonus and it will range from $200 to $1,000 depending on your length of service. …
I’m also excited to tell you that we’re making an important change to benefits by expanding our paid leave policy to provide full-time hourly associates with 10 weeks of paid maternity leave and six weeks of paid parental leave. This expanded parental leave also applies to salaried associates and to parents who adopt. We will also contribute $5,000 to the cost of adoption.
McMillon cited the corporate tax cut passed by the US Congress in December as part of what prompted the company’s decision. Several other major US employers, including AT&T, Wells Fargo, and Boeing, have also announced plans to invest part of their tax savings in raises or bonuses, though most companies have said these savings will mainly be spent on debt repayment, dividends, and stock buybacks.
Since Walmart began a push to raise wages for its legion of store employees last year, leaders at the big box chain have attributed its solid performance to the greater investment they were making in their staff. And because Walmart is such an enormous actor in the US economy, its choices have ripple effects in the retail sector. Over at Quartz, Oliver Staley argues that while some see the company’s size as being a “malign force,” that doesn’t take into account how Walmart’s choices can be also be beneficial:
The company also has used its massive buying power to eliminate waste in packaged goods and to drive down the cost of energy-efficient light bulbs, speeding their widespread adoption. Raising wages can have an even bigger impact. Walmart employs one in 10 US retail workers, and one out of every 100 US private-sector employees. Just as the company forced competitors to hold the line on wages, increasing its pay is now pressuring rivals to match it.
Walmart also raised salaries for entry-level managers in response to the Obama administration’s now-defunct overtime rule last year, but at the bottom of the pay scale, seemingly small increases, say from $10 to $11 an hour, can make a big difference in the lives of the working poor. Walmart is such a huge employer, Staley points out, that its pay practices effectively set a benchmark for the rest of the retail industry, pressuring other retail giants like Target to commit to adopting a $15 minimum wage by 2020:
Screenshots of the Legion IOS App
In sectors like food service and retail, where front-line employees work hourly and customer traffic is highly variable, the conflict between businesses’ need for flexible staffing and employees’ desire for predictable hours and incomes has led to increased labor activism and efforts to regulate variable scheduling. Even though most employees with variable schedules don’t have a problem with them, they can be a hardship for low-income employees struggling to make ends meet, or parents trying to schedule around the needs of their children. The controversy has led to some major retailers dropping the practice of “on-call” scheduling.
Fortunately, a growing number of technological solutions are coming to market to help organizations set and communicate schedules in ways that are more predictable and less disruptive to their employees. The latest of these is a startup called Legion, which recently raised $10.5 million in funding for its platform. Founder Sanish Mondkar tells TechCrunch’s Matthew Lynley that he hopes to use big data to crack the challenge of intelligent scheduling once and for all:
The startup uses large amounts of data, all the way down to the weather near a store, to try to predict how busy it will be and how to intelligently staff that store and prepare for the foot traffic. It also works to sort out the best possible schedule for each employee, whether they want to work a regular shift at the same hours or vary from week to week and trade shifts a lot. The company is rolling out with Philz, one of Silicon Valley’s favorite coffee projects, to try to prove out such a concept. …
Starbucks has a reputation for taking good care of its store employees (or “partners” as it likes to call them), but it has nonetheless drawn some controversy this year regarding its paid parental leave program. Under a new policy announced earlier this year, new mothers who work at the coffee chain’s corporate offices are entitled to as much as 18 weeks of leave at full pay after giving birth, while fathers and adoptive parents get 12 weeks. Store employees working more than 20 hours a week and who have been with the company more than 90 days are allowed six weeks of paid medical leave upon giving birth, while those who adopt are eligible for a six-week adoption allowance, both at 100 percent of their average weekly pay.
Even though these benefits are much better than what most hourly retail and service employees in the US enjoy, the policy raised questions about why corporate employees were entitled to so much more. In August, the Guardian’s Molly Redden highlighted the impact of this disparity on store employees, noting that Starbucks is not alone among major US companies in offering more generous parental leave benefits to their corporate employees than to their front-line staff. Now, Redden reports, a group of investors led by Zevin Asset Management is pressuring Starbucks to tell its shareholders whether this discrepancy might constitute employment discrimination:
“Paid family leave is a huge factor in how well women can stay involved in the workforce after having a baby, or how much time out they have to take in their careers,” said Pat Tomaino, Zevin’s associate director of socially responsible investing. “Women and their families benefit from equal and generous paid family leave – but companies do too.”
The controversial practice of zero-hours contracts, in which employees are not guaranteed work in any given pay period, is showing signs of rapid decline in the UK, Hayley Kirton reported at People Management this week, citing new official figures:
Data from the Office for National Statistics (ONS), published this morning, showed there were 1.4m employment contracts that did not guarantee a minimum number of hours in use in May, down a third (33 per cent) from a peak of 2.1m in May 2015. …
The [Labour Force Survey] found 883,000 people, or 2.8 per cent of all people in employment, had a zero-hours contract role as their main job between April and June 2017, compared with 903,000 people, or 2.9 per cent of all those in employment, between April and June 2016. The number of zero-hours contracts in use has also fallen by 17.6 per cent from 1.7m in May 2016, while the proportion of organisations using zero-hours contracts has dropped from 8 per cent to 6 per cent in the same time period.
Although the ONS also found that the typical zero-hours employee worked an average of 25.7 hours a week, it also found that over a quarter of them wanted more hours than they were getting. Another recent report highlighted the insecurity of employees on these types of flexible contracts, whose home lives and mental health suffer due to inconsistent schedules and incomes, and found that many of them ended up “begging” their managers for schedule changes or more hours.
Recently published research by sociologists at Cambridge and Oxford paints a dismal picture of the UK’s flexible workforce. Flexible contracts, which give hourly employees a minimal number of guaranteed hours (or none at all, in the case of zero-hour contracts), damage these workers’ home lives and mental health, and force them to beg their bosses for schedule changes or more hours to make ends meet, according to the Independent:
Dr Alex Wood, of Oxford University, embedded himself as a shelf-stacker at a UK supermarket while formerly a researcher at Cambridge’s Department of Sociology, where he experienced first-hand the “toxic” interactions between shop management and workers, witnessing employees “begging” their bosses for additional hours.
“People are put on contracts that are one or two or four hours a week, and it’s not possible for them to survive on this. But often they are hired under the assumption that they will get more hours than that,” he told The Independent. “It creates this situation whereby in order to be able to survive, people have to constantly go up to their manager and ask them for more hours, saying they can’t make ends meet without more hours, asking: ‘Please can you help me.’ Then if and when the manager helps the workers out, it means they feel very indebted to their manager to work hard.”
The city of St. Louis passed an ordinance in 2015 to raise the local minimum wage to $10 per hour as of this May and to $11 next January. This put it well ahead of the state minimum wage in Missouri, which stands at $7.70, just slightly above the federal minimum of $7.25. However, a new Missouri law that goes into effect August 28 will override the local minimum wage increase and return St. Louis’s minimum wage to the state standard, CNN reported last week:
The Missouri General Assembly passed a law earlier this year that prohibits local governments from setting a higher minimum wage than what the state requires. St. Louis Mayor Lyda Krewson, a Democrat, called its passage in May “a setback for working families.” …
Missouri Governor Eric Greitens took a stance in the minimum wage debate, but didn’t sign the bill into law. It will go into effect next month regardless. The Republican governor said the St. Louis ordinance that raised the minimum wage will “kill jobs, and despite what you hear from liberals, it will take money out of people’s pockets.”
To support his argument against the higher wage floor, Greitens cited a recent study by economists at the University of Washington, which found that a jump in Seattle’s minimum wage from $11 to $13 an hour last year ended up reducing low-wage workers’ incomes by an average of $125 per month due to cuts in their hours. Opponents of higher minimum wages have jumped on this study as evidence that they do more harm than good, but critics have found flaws in the study’s methodology and pointed out that it conflicts with most other research on the impact of minimum wage hikes.