Is Walmart Cutting Costs With Temp Workers?
In a report sure to embolden those opposed to Walmart’s (NYSE:WMT) business practices, many of Walmart’s U.S. stores have only hired temporary workers in recent months, the first time it has done so outside of the holiday shopping season. Company spokesman David Tovar explained that the new hiring policy is not a cost-cutting move and is to ensure that “we are staffed appropriately.”
Temporary workers allow Walmart to adequately staff their stores on busy weeknights and weekends. Tovar contends that the majority of its staff remains regular full-time, however Walmart’s temporary staff — called “flexible associates” within the company — have risen from 1 to 2 percent before 2013 to a number approaching 10 percent. ”Their hours flex by the needs of the business from time to time,” Walmart U.S. Chief Executive Bill Simon told reporters the day before Wal-Mart’s annual meeting last week.
Walmart’s new hiring strategy could be seen as a way to cut costs amidst economic uncertainty. With consumers still struggling in the difficult economy, Walmart’s profit margins are as thin as ever. Additionally, with Obama’s healthcare reform potentially raising healthcare costs next year, the increase in temporary workers could be seen a cost-cutting strategy, although Tovar denies this.