Walmart Raises Minimum Wage, Lib Lawmakers Cheer; Then Retailer Closes Dozens of Stores & Fires Thousands
Wal-Mart was quick to make a media splash with the news that it was raising the starting hourly wages to $11/hour, expanding employee benefits and offering worker bonuses of up to $1000 in response to the Trump tax cuts; it was far more covert, however, with the news that on the very same day it was also closing hundreds of Sam’s Club stores nationwide and laying off thousands of workers according to numerous media reports.
Jessica Buckner, an audit team lead at a Sam’s Club location in Anchorage, told local TV station KTVA that all Alaska stores are closing as part of a larger downsizing across the U.S. “From what I heard, there’s over 260 stores that have been closed down,” she said according to CBS News.
The wholesale clubs’ official closure date is Jan. 26, Buckner said.
Shortly after, the company issued a statement, stating that the number of stores for closure is somewhat lower, at 63, if still a sizable number. That compares with a total of five wholesale club stores the company has closed since fiscal 2013, securities filings show.
Ten to 12 of the closed stores could be converted to e-commerce facilities, the spokesperson said. The news is consistent with Sam’s Club’s ongoing plans to optimize its stores to fulfill more online orders and keep pace with internet retailers such as Boxed.
The closures also affect stores in New Jersey, upstate New York, Georgia, Illinois, Indiana, Ohio, Louisiana, North Carolina, Tennessee and Texas. In some locations, per social media, people showed up to work only to be told that their location was closing, with nearly no advance notice. – READ MORE
The CEO of fast-food restaurant Jack in the Box said “it just makes sense” to replace cashiers with robots due to the minimum wage increase in California.
“As we see the rising costs of labor, it just makes sense” to swap cashiers with kiosks where customers can order their food themselves, CEO Leonard Comma said Tuesday at the ICR Conference in Orlando, Fla., Business Insider reported.
However, Comma said that while his fast-food restaurant has tested products with technological advances at their establishments, he has decided to not go forward with the kiosks.
California, where Jack in the Box is based, will raise its minimum wage to $11 in 2018 and again in 2023 to $15. California and 18 other states have proposed to raise their respective minimum wages, Grub Street reported. – READ MORE
On Monday, the national restaurant chain Red Robin announced it would eliminate busboys at all of its 570 restaurants, as the company expects it will save $8 million in 2018 by doing so. Red Robin’s chief financial officer Guy Constant told attendees at the ICR retail conference, “We need to do that to address the labor increases we’ve seen.”
Michael Saltsman, director of the Employment Policies Institute (EPI), told FOX Business, “I read that as minimum wage. Somebody like Red Robin, which has a lot of exposure in western states [where the minimum wage is rising faster] … this is sort of a burger and beer chain. If they can’t pass those increases off in higher prices … they have to find a way to do more with less.”
851Franchise.com editor-in-chief Nick Powills added, “From a business standpoint, [Red Robin made a] very smart move. From an employee standpoint, you just cut out $8 million worth of labor. The interesting thing about the minimum wage hike is that those that made the decisions to do it, did it on behalf of the employee … when intentions are good, and you can’t appease everybody, someone is going to eventually be on the short [end of the] stick.” – READ MORE
On January 1, the Canadian province of Ontario raised its minimum wage from $11.60/hour to $14/hour. How are businesses responding? Probably exactly how you would expect.
According to the Bank of Canada, because of the forced wage hike there will be an estimated 60,000 fewer jobs available in Ontario by 2019. Not just that, businesses are beginning to do what businesses do: react to changes in the market. Both Pizza Hut and Subway — to name a few — notified their customers that prices would increase as a result of the minimum wage hike
According to Aaron Aerts and Laura Jones of the Canadian Federation of Independent Business, “The negative impacts will ripple throughout the economy: layoffs, reduced hours and fewer opportunities for young workers; higher prices for consumers; increased automation; and reduced investment. Pretending these impacts don’t exist is fa-la-la-la-la economics.” – READ MORE