Walgreens Ends Holiday Pay in Major Cost-Cutting Move
Walgreens, the struggling pharmacy giant, has quietly eliminated paid holiday time for its hourly employees following its acquisition by a private equity firm. This significant policy change, first reported by Bloomberg, will affect six major public holidays including Christmas and Thanksgiving.
According to internal documents, full-time workers paid by the hour will no longer receive automatic pay for Christmas Day, Thanksgiving, New Year's Day, Memorial Day, the Fourth of July, and Labor Day. This move is expected to cost full-time employees hundreds of dollars in lost wages each year, a substantial financial blow amid the ongoing cost of living crisis.
Private Equity Ownership Drives Austerity
The decision follows the chain's acquisition for $10 million in August by the private equity firm Sycamore Partners, which ended Walgreens' nearly century-long status as a publicly traded company. Since taking control, Sycamore has aggressively continued Walgreens' existing cost-cutting programme.
This has included reportedly firing around 80 corporate employees, dismantling most of the communications team, and closing a Chicago office. These cuts come on top of approximately 1,200 store closures announced in 2024, part of a wider retail downturn that has pushed US monthly hiring rates to a post-pandemic low.
Employees were reportedly informed of the holiday pay cancellation just one month before Thanksgiving, leaving little time to adjust their finances. While federal US law does not mandate holiday pay for non-working days, the move has drawn sharp criticism from labour advocates.
Backlash and Broader Implications
The Pharmacy Guild, a labour union for pharmacy staff, strongly condemned the decision. Co-founder Shane Jerominski told Bloomberg that the policy could force some employees to choose between paying bills and affording food. "I don’t think a health care worker anywhere in this country, regardless of what their title is, deserves to live like that," Jerominski stated.
This action by Sycamore Partners is likely to intensify the ongoing debate about the role of private equity in the American economy. Critics argue that such firms often degrade the quality of life for workers by purchasing established businesses and extracting short-term profits, sometimes at the expense of long-term stability. Other well-known brands like Red Lobster, Joann, and Toys 'R' Us have faced similar controversies under private equity ownership.
Walgreens, founded in 1901, has been contending with years of challenges including inflation, rising operational costs, thin prescription reimbursements, and significant shoplifting issues. The company's stock price had fallen by as much as 92 per cent from its 2015 peak by October 2024, illustrating its profound struggles before the buyout. Neither Walgreens nor Sycamore Partners provided immediate comment on the reported policy change.
