Posted on: Monday, June 21, 2004

Kmart workers losing hours

By Tenisha Mercer
The Detroit News

TROY, Mich. — Kmart Holding Corp.'s relentless cost-cutting has impressed Wall Street and helped the retailer climb back into the black. But its employees say they are bearing the brunt of the austerity push.

Earlier this year, the discount retailer cut the hours of thousands of its employees, sharply reducing its full-time workforce.

Now the company has eliminated automatic annual pay increases in favor of merit raises and has implemented changes to employee medical coverage, which some workers say is resulting in higher deductibles.

Former Kmart employee Audrey Mitchell, 68, of Orlando, Fla., said she had no choice but to retire in March after her full-time job was cut to 22 hours a week.

"I couldn't understand why they were doing this to me," said Mitchell, in tears. "I was a Kmart girl. Whatever they needed me to do, I did it."

The moves come as Kmart struggles to compete with Wal-Mart Stores Inc. and Target Corp. Kmart operates 1,511 stores and has 158,000 employees or "associates."

The company closed nearly 600 stores and slashed 57,000 jobs before emerging from bankruptcy in May 2003. The company plans to sell as many as 24 of its stores to Home Depot for up to $365 million.

The store closings and cost-cutting have left many Kmart workers unsettled. Many employees are sounding off on Internet message boards about the cutbacks and changes.

Kmart President and CEO Julian Day, in an e-mail to store managers, wrote: "We have all experienced a great deal of change in the last several years, with the most recent changes being for the better. As we continue to improve Kmart, we will continue to experience change."

Last month, the retailer reported its second consecutive profitable quarter in three years, with a net income of $93 million for the first quarter that ended April 28.

Kmart spokesman Jack Ferry said the company has not singled out employees for cost-cutting. "The focus will continue to be on profitable sales, controlling costs, streamlining overhead, improving customer service and increasing asset productivity," Ferry said.

Ferry said Kmart's changes to workers' hours were the result of streamlining operations, which means less of a workforce is needed.

But Liz Rizzo, a 29-year employee at the Kmart in Livonia, Mich., said the workload has increased at her store. "The reality is there is the same amount of work as before but fewer people," she said.

Kmart would not disclose how much store employees earn per hour on average. Part-time employees start as low as $7 an hour, according to employees. Wal-Mart and other retailers also have faced complaints from workers about their pay scales.

Curtis Borders, 55, of Warren, Mich., said he was fired last month after he had what he described as a minor accident. But the 12-year Kmart worker said he believes he was let go after he balked at attempts to make his full-time job in shipping-and- receiving a 30-hour-a-week job.

"Kmart has forgotten about its employees," said Borders, who worked at stores in Detroit and Warren. "I don't have a gripe with the company per se, but the way they treat associates is not right."

Borders said that during his last six months at Kmart, he retrieved carts, provided maintenance and groundskeeping and stocked shelves — jobs that shipping-and-receiving employees like him didn't perform up until now.