Firing 1,500 People An ‘Important Step’ In Whole Foods ‘Evolution’

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The organic food giant Whole Foods announced Monday plans to cut 1,500 jobs in response to a rapidly changing marketplace.

“This is a very difficult decision, and we are committed to treating affected Team Members in a caring and respectful manner,” Walter Robb, co-CEO of the store, said in a statement. “We have offered them several options including transition pay, a generous severance, or the opportunity to apply for other jobs.”

The statement was issued alongside a filing with the Securities and Exchange Commission (SEC). Whole Foods hopes the move will lead to lower costs for consumers.

“In addition, we will pay these Team Members in full over the next eight weeks as they decide which option to choose,” Robb continued. “We believe this is an important step to evolve Whole Foods Market in a rapidly changing marketplace.”

Whole Foods estimates the 1,500 jobs lost will account for 1.6 percent of its workforce. The move comes after several years of prominent growth. In the past year alone, Whole Foods Added over 9,000 new jobs. Additionally, in the past five years, it added nearly 35,000 jobs.

The filing does not get into detail of what changes in the marketplace prompted the decision. With limited competition in the organic market for years, Whole Foods could comfortably keep higher prices. Now Kroger, Wal-Mart and Target along with other major stores all sell their own lines of organic foods.

Another possible factor is increased cost of labor. Across the country states and cities have moved to increase their minimum wage. Some cities have even increased their minimum wage to $15 an hour. Currently the federal minimum wage is $7.25 an hour. Twenty-nine states and the District of Columbia have a minimum wage higher than the federal minimum wage.

Businesses have few options to offset the higher costs of labor. They can increase prices, cut hours, cut workers and even automate services. Many stores and restaurants now have computers that do what cashiers and waiters traditionally have done.

The $15 minimum wage movement is led primarily by union-backed groups like Fight for $15. Seattle led the way in passing such an increase back in June 2014. San Francisco and Los Angeles followed not long after. Each local ordinance phased in the new wage over the course of several years.

There is a debate among economists of whether the benefits of raising the minimum wage outweigh the negative. Nevertheless, even the nonpartisan Congressional Budget Office (CBO) agrees any increase of the minimum wage will likely result in at least some job loss.

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