Wal-Mart will end extra pay on Sunday
NEW YORK: Wal-Mart Stores Inc., the largest private employer in the U.S., plans to stop paying staff there an additional $1 an hour for working Sundays, taking a bite out of its single biggest expense.
The move, which takes effect next year, applies only to employees hired after Jan. 1, spokesman Greg Rossiter said in an interview yesterday. The move wouldn't affect the Bentonville, Arkansas-based retailer's 1.4 million current U.S. staff.
Since taking over almost two years ago, Chief Executive Officer Mike Duke has pledged to slow cost growth as the retailer copes with six straight quarters of sales declines at U.S. stores open at least a year. Operating expenses rose to about $80 billion last year, partly because of health benefits.
"It's sad-people who work on Sunday need that extra dollar," Cynthia Murray, a WalMart employee at a supercenter in Laurel, Maryland, said in an interview. Murray said she makes $11.20 an hour, and doesn't work Sundays.
The move won't apply to employees based in Rhode Island and Massachusetts, who weren't eligible for the extra pay owing to state employment laws, Rossiter said. The retailer has 49 stores in Massachusetts and 10 in Rhode Island as of this month, according to its website. The change will take effect at WalMart stores, Sam's Club outlets and warehouses.
"We regularly review our compensation programs and we are confident Wal-Mart's pay and benefits are as good if not better than other retailers," Rossiter said.
Wal-Mart's move reflects a change in workplace reality, said Peter Cappelli, Director of the Center for Human Resources at the Wharton School of the University of Pennsylvania.
"It signals the view that Sunday no longer has any particular significance for most employees as a special day that requires extra compensation," he said.
The decision represents a blow to hourly workers, said Dorian Warren, an assistant professor of international and public affairs at Columbia University who studies labor relations.
"It amounts to a huge wage cut," said Warren. "Wal-Mart has been underperforming financially relative to its competitors and needs to find quick ways to shore up profits."
The retailer has also switched to making incentive payments to hourly employees on a quarterly basis instead of an annual one, and plans to increase the dollar amount in the bonus pool, Rossiter said. The company's headcount in the U.S. has stayed stable at about 1.4 million since January 2008, according to regulatory filings. 401(k) Changes Store labor is Wal-Mart's biggest cost, U.S. stores chief Bill Simon said in November. A month before that, Wal-Mart said it plans to end profit-sharing contributions next year, replacing them with matches to employee 401(k) retirement plans to bring down benefits costs. Some money saved from the switch will go toward bonuses for store employees, the company said.
"The company is obsessive about labor costs, not just to save money in the coming quarter but to encourage turnover, which also keeps wages low," Nelson Lichtenstein, a professor at the University of California, Santa Barbara and author of "The Retail Revolution: How WalMart Created a Brave New World of Business," said in an e-mail message.
Wal-Mart rose 60 cents to $55.09 yesterday in New York Stock Exchange composite trading.
The stock had gained 3.1 percent this year before today, compared with a 9.7 percent increase in the Standard & Poor's 500 Index. -Bloomberg