RIFd by RFID

By | 23 February 2006

My title today is a compact pair of acronyms. From a presentation I saw this week on WalMart’s investments in RFID (radio frequency identification) technologies as a cost-savings measure, they expect to be able to save around $6.7b dollars annually in salary expenditures by moving to RFID tags and scanners to reduce theft and ease purchasing.

With a quick, back-of-the-envelope estimate, that comes out to 1 billion man-hours they won’t have to pay for. Considering the size of their workforce (estimates are placed between 1.25 and 1.5 million [mostly part-time] employees), that’s about a 65% reduction in their workforce. Getting RIFd is a common euphemism for being down-sized, itself a euphemism for being laid-off or fired.

RFID technology is a very promising means to promote accurate inventorying, better shipment tracking, etc. However, laying-off ~1 million part-time workers in the process raises some interesting economic questions in my mind. Stereotypically, WalMart’s primary workforce – teenagers, housewives, and older folks – don’t tend to have high educations, and often aren’t qualified to do a lot of the work necessary in our technology- and service-based economy. Admittedly, the younger workforce will be more likely to go on to higher education and improve their careers in the future, but I do see an issue over so many others being more-or-less dumped on the unemployment rolls.

So here’s the ethical question: is it right for a company to lay-off a huge percentage of its workforce to improve its bottom-line? Legally, it’s legitimate. From a business perspective, it makes a great deal of sense, too: RFID tags don’t need training, sick time, lunch breaks, or bathroom trips. And, if the stereotype is even 25% true, those folks WalMart lets go from their jobs will not be able to go out and replace their jobs elsewhere.

One of the beauties of capitalism is that those who can market a good idea can make out really well with it. The dark side of it is that they will pay people as little as possible to produce that service or product. WalMart takes a lot of heat for paying its workers not much, and employing folks as mostly part-timers to save on benefits costs. It’s their right to pay their employees whatever those people will work for, but cutting that many people off from a job all at once could have some interesting repercussions.

I’m all for the company improving its bottom-line, reducing theft, and cutting prices to its customers. However, I would like to see them take some initiative along the way to help train at least some of their workers to do something else productive after they leave.

(For more information about RFID, see these Google results.