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10 Sep, 2021 11:40

What Would Bezos Do? Walmart cuts workers’ bonuses as it hikes wages, following in the footsteps of Amazon

What Would Bezos Do? Walmart cuts workers’ bonuses as it hikes wages, following in the footsteps of Amazon

Having offered workers a raise in minimum wages, US retail giant Walmart will be eliminating quarterly bonuses for its employees. Amazon did the same in 2018, after being strong-armed into a wage hike.

One of the largest employers in the country has for decades paid bonuses to store workers, or associates as Walmart calls them, based on the performance of each outlet. The perk, which is dubbed MyShare, will be scrapped at the end of this fiscal year on January 31. The company said the move would offer its employees a predictability of income and was part of its plan to boost worker’s wages.

“The overwhelming majority of our associates say their hourly wage is the most important part of their pay and by folding the bonus into the overall pay raise, associates receive consistent, predictable pay,” a spokesperson for Walmart said.

Last week, Walmart announced its plan to increase the hourly minimum wage from $11 to $12, which would affect more than 565,000 store workers. The company estimated that the average hourly wage will go up from the current rate of $15.25 to $16.40 in its US stores. The increase is set to come into force later this month.

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Store performance-linked worker bonuses at Walmart were started under the retailer group’s founder, Sam Walton, who saw them as a way to give workers a sense of personal involvement in the company’s successes and discourage unionization. Initially paid on an annual basis, MyShare was moved to quarterly payments in 2007, according to The Wall Street Journal, which was the first media outlet to report the news.

The give-and-take approach to compensations was criticized by some progressive commentators, who viewed it as just another way to manipulate public perceptions while keeping worker compensations as low as possible. Amazon, one of Walmart’s major competitors, took the same approach in 2018, after it was strong-armed by federal lawmakers into hiking its minimum hourly wage to $15.

Amazon discontinued monthly financial incentives and stock options for employees after the wage hike, stating that its workers prefered the “predictability and immediacy of cash”. The increase in minimum wages followed pressure from the US Senate, where progressive lawmaker Bernie Sanders introduced the so-called “Stop BEZOS Act”.

The abbreviation in the name stood for “Bad Employers by Zeroing Out Subsidies” and was a clear reference to Jef Bezos, Amazon’s then-CEO. It would require companies like Amazon and Walmart to reimburse the cost of federal assistance programs, like food stamps or Medicare, received by its workers. Sanders welcomed Amazon’s decision to raise wages, to which Bezos said he hoped “others will join in”.

Both Amazon then and Walmart now assured that the scrapping of perks would not result in nullifying the effect of increased wages.

Today’s labor market in the US is quite different from what it was in 2018, with employers finding themselves in a short supply of people willing to take low-paid jobs. Companies have been looking for ways to boost recruitment with various perks and benefits.

Amazon, for example, has offered this week to cover college tuition fees for 750,000 of its frontline workers. The scheme is expected to cost $1.2 billion until 2025, the online retailer estimated. Walmart announced investing $1 billion over five years into its own college tuition assistance program in late July.

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