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Trouble in Walmart Nation

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Not so much for Walmart shareholders after the company beat estimates late in the week helping the stock (WMT) to close on Friday 7.7 percent off its low for the week.  MarketWatch notes the big-box retailer was helped by automation.

Walmart talked about the significance of automation in an April post on its corporate site.

“Smart assistants have huge potential to make busy stores run more smoothly, so Walmart has been pioneering new technologies to minimize the time an associate spends on the more mundane and repetitive tasks like cleaning floors or checking inventory on a shelf,” said Elizabeth Walker, from Walmart corporate affairs.  – MarketWatch, Aug 17th

Walmart Nation

We don’t know how this helps Walmart nation, however.  The company is the largest employer in many states throughout the country.

When excluding public administrative bodies, Walmart is the largest employer in 22 states.  – USA Today

Walmart is also the world’s largest private-sector employer.   The company has over 100k companies in its supply chain worldwide and according to its 2019 annual report,

As of the end of fiscal 2019, Walmart Inc. and our subsidiaries employed more than 2.2 million employees (“associates”) worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. – Walmart 2019 Annual Report 

This compares to the 2018 Annual Report,

As of the end of fiscal 2018, Walmart Inc. and our subsidiaries employed approximately 2.3 million employees (“associates”) worldwide, with 1.5 million associates in the U.S. and 0.8 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good and are continuing to improve. – Walmart 2018 Annual Report

Note the 100k year-to-year decline in employees, which appear to be the shrinking of their international workforce.   We couldn’t find any more current data on employment from the company’s quarterly reports.  Still looking, however.

Jobs at Big-box & Supercenter Retailers Are Collapsing 

We took a look at growth in retail payroll jobs over the past few years, which has been absolutely dismal.   Retail payrolls are down 176k jobs under President Trump while total private nonfarm payrolls are up 5.5 million.

Some Good News

The retail sector’s average hourly earnings (AHE) are up 9.66 percent during the Trump administration, an increase of over 70 percent from the prior 30-months (before Feb ’17) AHE growth rate.  These data should be kept in context as the retail wage gains begin at a relatively low base of around $18 per hour.

The data provides the basis to both those who argue pressuring companies to raise wages leads to layoffs whether it’s true or not, and to those who argue automation augments and makes labor more productive leading to higher real wages.   We are at the beginning of our vacation and are still in a holding pattern awaiting medical clearance for a 15-hour flight given our little episode last Christmas, so we are not going to go get into it at this time.

Finally, the following is a chart of monthly and 12-month payroll changes for warehouse clubs and supercenters retailers, of which Walmart and Costco belong.

Payrolls have been in virtual free-fall since 2017 as the warehouse clubs and supercenter retailers have lost over 40k jobs in the 12-month period since June.

Our sense automation is going to accelerate and jobs in Walmart nation are going to continue to disappear at an exponential rate.  We are not sure if the wage increases are sustainable without continued political and social pressure on management, which will probably lighten up as more and more jobs disappear.

Life is cruel and unfair sometimes and it is clear, at least to us, in this sector technological change is going to hurt those most vulnerable.  If you are reading this, you are part of the Lucky Sperm Club (LSC), and there but by the Grace of God go we.

Very few politicians have a plan to deal with it and most have their heads in the sand or in the clouds, or blaming others, for that matter.

Whatever the case, it is going to be complicated to resolve and class conflict will surely only increase.

By the way,  Costco and Walmart are on two entirely different planets as to how they treat their employees, in our superficial observation.  That’s a start, at least.

Politics

How this all plays out politically, we don’t know.   The Democratic candidate, Andrew Yang,  can probably get some traction out of it as he is the only one who seems to understand it and is at least trying to address it with the idea of a universal basic income (UBI).

One thing is for certain, the administration understands the political blowback as it is taking place in many of the home states of their base and is blaming Amazon and their non-BFF, Jeff Bezos, for the Retailgeddon, which hardly applies to Walmart, in our view.

Stay tuned, folks, this is one to watch closely.

 

 


Source: https://global-macro-monitor.com/2019/08/18/trouble-in-walmart-nation/


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    Total 3 comments
    • PaulTarsuss

      Tear ‘em up, then tear ‘em down, I say.

      But I’m not a robot, so what do I know….

    • Slimey

      I notice my loco Walmart is busy. Expanding into all kinds of products and departments. Taking other people’s sales away. :wink:

    • tonyw

      so….walmart is secretly forming a private army

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