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Building a cheaper workforce

A Wal-Mart store sign in Illinois

TEXT OF INTERVIEW

KAI RYSSDAL: If you've been paying attention the past couple a months, you might have noticed Wal-Mart's been in the news a lot. Lowering prices for some prescription drugs, forcing suppliers to cut back on packaging to ease the load on landfills. Most of the spin on those stories was positive, part of the company's effort to enhance, shall we say, its image. Not so the item on the front page of this morning's New York Times that Wal-Mart's putting more pressure on its hourly and part-time workforce. Steven Greenhouse wrote the story in the Times today. Steve, good to have you with us.

STEVEN GREENHOUSE: Nice to be here.

RYSSDAL: Let me review with you exactly what you understand Wal-Mart is going to do. You've talked to investment bankers and analysts and they say Wal-Mart is actually going to dramatically increase its percentage of part-time employees and cap its wages too.

GREENHOUSE: Yes. Wal-Mart's essentially doing three things at once, all to create a cheaper, more flexible workforce. One, it's moving to more part-time workers. Analysts have said they've been told that Wal-Mart's moving from 20 percent part-time to 40 percent part-time. Second, last month Wal-Mart implemented a new policy called wage caps, where workers in many different categories face a wage cap and workers who are at or above that cap will never get an annual raise again. And third, Wal-Mart is asking more of its workers to work in the evening or on weekends and many workers protest that they're being forced to work hours that they don't want and that get in the way of their family lives.

RYSSDAL: Isn't this what companies are supposed to do? Maximize their productivity by shifting workforce around to busy periods or away from slack periods?

GREENHOUSE: yes, it is what companies are supposed to do. They want to serve their customers better and to do that they want a more flexible workforce with more flexible hours. But, and it's a big but, it could hurt morale in the workforce and if you hurt morale that could hurt productivity as well.

RYSSDAL: This is not new, this trend at Wal-Mart. The Times reported last year on a memo from the HR office at the company saying 'we need healthier workers who are going to take less healthcare cost. We need younger workers, more productive workers . . .' I mean it's not a surprise to anybody.

GREENHOUSE: Wal-Mart denies that it's trying to hire healthier workers. Yes there was that memo last year where the woman who's now the head of human resources at Wal-Mart said it would be good for us to try to hire healthier workers and Wal-Mart said 'well we're not trying to do that.' However, many people say with these new policies, Wal-Mart is perhaps trying to push out older, less healthy, higher-wage long-term workers to hire more part-timers who tend to have lower wages and tend to qualify less for their health insurance program.

RYSSDAL: Wal-Mart's obviously the biggest retailer in the world. Are labor groups worried that this sort of action might spread to others who will do as Wal-Mart does?

GREENHOUSE: Yes, very much so. Wal-Mart is the proverbial 800-pound gorilla and when it does something, many others follow. Now Wal-Mart will say, there are other companies that have a more flexible workforce to serve their customers better and to in theory be more productive. But the downside of that is, that creates all sorts of problems about finding childcare and can you read to your kid at night and, you know, can the family sit down for family dinners as child development specialists and psychologists often recommend. So there are tensions between what's best for the employer and what's best for the employee and the employee's family. And that's not playing out just at Wal-Mart, it's playing out at companies across the land.

RYSSDAL: Steve Greenhouse is a reporter for the New York Times. Steve, thanks a lot.

GREENHOUSE: Thanks very much Kai.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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