Commentary

Walmart Touts The Good News, Smothers The Bad News

Walmart had some good news to share yesterday, and it did so with a flourish in an early morning press release. Thanks to the recently passed, GOP-led tax cuts, it said, it was raising its starting wage to $11, expanding maternity and parental leave benefits and doling out a bonus to workers (as much as $1,000 for those with 20 years seniority). 

Treasury Secretary Steven Mnuchin got in on the act during a White House press conference, telling reporters in response to a question about the announcement: “The whole purpose of the tax cut act was to put more money in companies so they could compete competitively with international companies…. This is really a revolutionary process,” reports The Hill’s Brandon Carter. 

advertisement

advertisement

But Walmart also had some bad news to share yesterday, only it didn’t share it until it was all over the place. Instead, the abrupt closing of many Sam’s Clubs around the country — 63 all told, it eventually revealed — trickled out on social media and gathered steam as thousands of workers showed up to discover they were summarily out of their jobs.

John Furner, president and CEO of the Walmart division, said that up to 12 of the facilities would be converted to ecommerce fulfillment centers and he hoped to place “many” of the associates in other locations. “Change is never easy, but we’re making these decisions as part of running a healthy business,” he said.

The disparate realities quickly became a political joust. 

“Great news! Thanks to the Tax Cuts And Jobs Act, Walmart — America’s largest employer — is raising wages, providing bonuses, and improving benefits for its workers. This law is helping improve people’s lives,” tweeted Wisconsin rep and House speaker Paul Ryan, a Republican.

“They literally just laid off thousands of employees. Like, literally. You have done nothing but line the pockets of everyone who works on the top floors. Everyone below has been left behind,” shot back the San Francisco Bay-area congressman Eric Swalwell, a Democrat.

“On its big day, the largest private employer in America had a public relations mess on its hands,” write Danielle Wiener-Bronner and Laura Sanicola for CNNMoney. “Throughout the day, Walmart did not make a public statement and did not return repeated requests for comment from CNNMoney.”

“This is a fantastic example of a company just not realizing exactly how quickly information travels,” Ed Zitron, founder of the media relations company EZPR tells Wiener-Bronner and Sanicola. “They're trying to pull the wool over people's eyes. They just made a rapid miscalculation.”

Speaking of calculations, critics on Twitter were doing their own. “It all adds up: Sam's Club laid off approx 11,025 employees today. If they are full-time employees making $11/ hour this = $252m. Walmart to give an average bonus of a $190 to each of their 1.4m US employees. This equates to $266m. Basically the layoffs pay for the Bonuses,” figures avowed never-Trumper Brian Krassenstein.

But Walmart’s CEO was looking at the bright side. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Doug McMillon avers in the statement announcing the good news. 

“Walmart’s decision makes it the latest corporate titan to plow expected tax savings into employee payouts. Boeing Co., AT&T Inc. and Wells Fargo & Co. have all made similar announcements in recent weeks,” points out Bloomberg’s Matthew Boyle.

But skeptics have suggested that the announcements are more about putting a PR sheen on plans that were already in the works — Wells Fargo has had problems figuring out its own motivations — and some suggest yesterday was no exception.

“Observers said Walmart almost had to raise wages now if it wanted to keep step with peers such as Target, which late last year raised its starting wage to $11 an hour, with plans to reach $15 by 2020,” write Abha Bhattarai and Todd C. Frankel for the Washington Post.

“I would’ve been astounded if they hadn’t raised wages,” Thomas Kochan, a professor at MIT’s Sloan School of Management, tells them. “What’s impossible to sort out is how much of this is because of savings from the tax cuts, and how much is because of pressure they’re receiving from employees and labor groups.”

In fairness, the closing of the Sam’s Clubs should be framed in the light of the faltering bricks-and-mortar environment. It’s no secret that shops are shuttering in malls all over the country. Oops. This just in. Don’t call them malls. It’s so ’70s. They are henceforth to be known as “The Shoppes at …,” or something like that, the Wall Street Journal’s Esther Fung and  Khadeeja Safdar tell us in “Please Visit Our Collection of Stores Under One Roof, Which Totally Isn’t a Mall.”

2 comments about "Walmart Touts The Good News, Smothers The Bad News".
Check to receive email when comments are posted.
  1. Paula Lynn from Who Else Unlimited, January 12, 2018 at 9:27 a.m.

    Closing the stores decreases taxes and so many other expenses including transportation costs,  maintenance costs and more. Plus, many states raised the minimum wage which forced Walmart to raise hourly rates anyway. So which stores and where were they closed ? Now they can raise prices, too, in the sneakiest ways. In their own products, you get an ounce or 2 less. Those 14 oz half gallons of ice cream will turn to 13 oz. Then they will tell you it's for your own good. The less you have, the harder you work and the more you will appreciate it. SOund familiar ?

  2. Ginger Cookie from Consultant, January 12, 2018 at 10:43 p.m.

    And to add to Paula's comment, the millions of families getting this "great" raise of $11/hourly will still need subsidized entitlements, e..g. food stamps, etc....so again, Walmart gets subsidized by OUR tax dollars, because they refuse to pay more amenable wages to their retail staff...truly, who's kidding who, a couple with two kids can't live off making $11/hourly...therefore the entitlements kick in.. not much talked about...but a glaring point...and yes, the gross and net margins would be fine, just like via major fast food chains in Denmark, albeit different economic structures, just that Walmart needs to cut more "marbelized" fat off its upper echelon, for starters! 

Next story loading loading..