Walmart’s Hire-a-Vet Program: Patriotic Gesture? Or Good for Walmart?
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American veterans returning from war have had a history of finding employment at Fortune 10 companies. After the Korean War they got engineering and sales jobs at IBM and Texaco. After Vietnam they became production technicians and manufacturing coordinators at Dupont and Monsanto.

Those returning from Iraq and Afghanistan will be working at Walmart. Now that’s what I call economic progress.

At January’s National Retail Federation Convention in New York, CEO and President Bill Simon announced the Bentonville behemoth’s pledge to hire any returning veteran who wants a job, in a program it will kick off on (when else?) Memorial Day. It will result in 100,000 jobs for returning military personnel over the next five years.

This is a wonderfully patriotic gesture, and a great opportunity for all those returning vets, right? Or is it?

Walmart, with an estimated 1.4 million employees at its 4,600 U.S. stores and warehouse clubs, is the biggest retailer in the country, representing an estimated 14% of all US retail sales, and the largest private employer.

Many in the industry view this announcement as a PR strategy in the wake of the company’s alleged corruption troubles in Mexico and the perception that it has outsourced millions of American jobs to China and other countries through its import-heavy sourcing practices. The company, some pundits say, is worried about its stagnant market share, and wants to burnish its image among consumers.

Retail employment in January was a little over 15 million, 11% of total nonfarm employment in this country. That means about one of every ten retail jobs in this country is at Walmart.

The retail industry added 33,000 jobs in January, 21% of all new ones added in the U.S. economy. As shown in the chart below, retail job growth has been outpacing that of total employment in the US for the past few months.

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However, what’s important to note here is that big stores are not where the job growth is. Over the past year, employment in the department and discount store sector has decreased by over 100,000 jobs, compared to a corresponding increase of almost the same number of new jobs in the specialty store channel, resulting in vastly different employment growth rates for the two channels on a 12-month smoothed basis.

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How lucrative will a Walmart job be for a returning vet? The average Walmart sales associate earns a reported $8.85 per hour. On a full-time basis, that’s an annual salary of $17,700 per year – putting it right on the poverty line. And compared to what the veterans earned while in the military, it’s a huge pay cut. According to US government statistics, an enlisted person with fewer than two years of service and no dependents made an estimated $36,000 nontaxable last year, and that’s assuming he or she was receiving a relatively low housing allowance. So these folks will be drastically downsizing their financial situation, and that’s before taking into account the fact that new employees probably earn less than the average Walmart hourly rate.

There is a silver lining here, though. At least these folks will finally be out of harm’s way – except on Black Friday, that is.

Is Walmart planning to buck the trend among big stores and start adding headcount it doesn’t need to show its support for our returning men and women? Will this retailer of retailers swell its workforce by 7% as a way to show its patriotism?

Don’t bet on it. The announcement indicated the program would take place over five years. Walmart has a fairly high turnover rate, even by retail industry standards, so it’s likely that the 20,000 new hires per year will replace departing associates. Our humble opinion is that this will be a zero-sum game from a headcount standpoint, and one that might even offer a cost savings for the company, since these new employees might earn less than the people they’re replacing.

In other words, Walmart is doing this for Walmart. Pretty shrewd business, right?

Sir, yes, sir!

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