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Layoffs by Wal-Mart Stores Inc. a zero-sum game

Excerpt

The following is from the January 25, 2010, edition of The Dallas Business Journal. Professor Tom Fomby, chair of the Department of Economics in SMU's Dedman College, provided expertise for this story.

January 25, 2010

Wal-Mart Stores Inc. officials said this week the company will cut 11,200 jobs from its warehouse division Sam’s Club, which has several locations in the Dallas-Fort Worth area.

It is unclear how many local jobs will be impacted by the decision, but the cuts represent about 10 percent of the division’s national work force.

Making up the largest chunk of the cuts is Wholesaler Sam’s Club, which is eliminating 10,000 in-aisle demonstration employees and taste-test providers. Those functions will now be handled by a third-party provider, Shopper Events, and laid-off Wal-Mart Stores Inc. employees can apply for a job with Shopper Events.

Tom Fomby, an economics professor at Southern Methodist University, said the move is likely more about efficiency than the recession.

"What Wal-Mart traditional employees will lose (in terms of jobs), the third-party providers gain," he said.

Fomby said Shopper Events will hire employees to fill those slots, so in terms of numbers, it's a zero-sum change. He added that he was unsure of what insurance or health care benefit savings were realized by using the third-party company to fill the in-store demo posts.

Read the full story.

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