Don't Worry, Trend Towards Hiring Temps is Only Temporary (And Not at All Related to Obamacare)

Wal-Mart has a new strategy of hiring temporary workers, everyday (seemingly to match everyday low pricing). Spokesman David Tovar says that the move is not related Obamacare, even though it could take a year or more for temporary workers to receive health care benefits.

Let's dig deeper into Wal-Mart's Everyday Hiring Strategy to see if management claims pass the sniff test.

A Reuters survey of 52 stores run by the largest U.S. private employer in the past month, including one in every U.S. state, showed that 27 were hiring only temps, 20 were hiring a combination of regular full, part-time and temp jobs, and five were not hiring at all. The survey was based on interviews with managers, sales staff and human resource department employees at the stores.

Tovar said fewer than 10 percent of its U.S. workforce is temporary - or what the company internally calls "flexible associates" - compared to 1 to 2 percent before 2013.

The temporary workers are often being hired on 180-day contracts, according to the survey of Wal-Mart stores. The temps could eventually be hired for a regular full or part-time job or they could reapply for their temporary position, the Wal-Mart staff said.

"Full-time people are getting slimmer and slimmer," said a supervisor at a store in North Carolina, who asked not to be named, as did other store-level employees who were interviewed for this story, because she is not authorized to talk to the media.

She said that the five new employees hired this year at the store are all temps and hours of existing employees are being cut.

"Everybody who comes through the door I hire as a temporary associate," said a store manager in Alaska, who asked not to be identified. "It's a company direction at the present time."

Hiring temps is "one strategy" that retailers could use to mitigate the potential rise in healthcare costs due to the new healthcare care law, said Neil Trautwein, a healthcare lobbyist for the National Retail Federation. "Another strategy could be employing more part-time employees."

Wal-Mart already has begun to change the healthcare plans it provides workers. Last November, it said that newly hired part-time employees would have to work a minimum of 30 hours a week, up from 24 hours previously, before they can qualify for health coverage. Its U.S. employees also faced an 8-36 percent increase in premiums in 2013, the company said at the time, prompting some workers to forego insurance.

When the work hours are so variable that the employer is not certain whether an employee qualifies, they can elect to determine eligibility by measuring hours during a period of up to 12 months, a strategy Wal-Mart said it plans to use.

Temp workers may therefore have to wait a year - provided they are still employed at the company - to find out if they are eligible.

"A temporary worker may never get that far," said Barbara McGeoch, a principal and health benefits expert at consulting firm Mercer's legal, regulatory and legislative group. "They may never get the coverage."

Detail Recap

1. Temporary hiring at Wal-Mart has gone from 1-2% to 10% in a year
2. Employees face an 8-36 percent increase in healthcare premiums in 2013
3. Part-time employees now need to work 30 hours instead of 24 to get coverage
4. 61% of the stores in the survey were only hiring temps or were not hiring at all
5. Regular employees have seen their hours cut

But hey, none of this has anything to do with Obamacare. It just happened.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com