Buffeted by a tightening job market, high employee turnover and scrutiny of its labor practices, Wal-Mart, the largest private employer in the country, said Thursday that it would increase wages for a half-million employees.
The retail giant, which for years has been the target of widespread criticism over its low pay structure and increasing reliance on part-time workers, said all of its U.S. workers would earn at least $9 an hour by April.
While the company said about 40 percent of its workforce, or 500,000 people including those at the wholesale Sam’s Club outlets, would be affected, many of those raises will amount to much less than a dollar an hour more. A mere 6,000 employees receive the federal minimum of $7.25 an hour. Its part-time force already earns an average wage of $9.48, and full-timers an average of $12.85. In Florida, the average hourly wage for a full-time worker is $13.07, according to a company spokesman.
“Wal-Mart has been in labor disputes for years now, and people have been waiting to see when the shoe is going to drop,” said Calvin Silva, retail analyst at Nasdaq. “They realized that they were seeing some of the highest turnover for employees compared to the rest of the industry.” In Miami-Dade, Broward and Palm Beach counties, Wal-mart hired about 2,100 new workers in the past 14 months as a result of new store openings, a company spokesman said.
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Wal-Mart lags major retailers like Gap and Ikea, which have taken steps recently to set hourly wages at or above the $9 level, in an effort to reduce turnover and attract more lower-wage workers. Even those higher pay scales fall short of compensation offered by the likes of Costco, known to offer wages closer to $20 an hour, or the Container Store.
But Wal-Mart’s move could force other major retailers like Target and Home Depot to follow suit.
“Wage increases could be imminent for other companies,” said Oliver Chen, retail analyst at Cowen & Co. in New York.
Aside from competitive pressure to hire and retain low-wage workers, political pressure for higher wages has been building. Several states and cities have raised the minimum wage far beyond the federal minimum. Seattle, for example, raised its minimum wage to $15 an hour, and San Francisco approved a tiered approach to reach $15 in a few years.
Twenty-nine states now exceed the federal minimum, which has not risen since 2007, according to the National Conference of State Legislatures. President Barack Obama has proposed raising it to $10.10 an hour, but that effort has stalled in Congress.
A spokesman for the White House said, “Today’s announcement is another example of businesses, along with cities and states, taking action on their own to raise wages for their workers, recognizing that doing so can raise productivity, reduce turnover and improve morale.”
After the pay increases, the average full-time hourly wage at Wal-Mart will be $13, while the average part-time hourly wage will be $10. And by February 2016, current hourly workers would earn at least $10. Wal-Mart’s workforce of 1.3 million is split evenly between full-time and part-time workers, it said, and that ratio will not change.
Both figures still fall below the $15 an hour “living wage” that many union-backed Wal-Mart employees have been pushing for. Workers are also campaigning for steep wage hikes at other major non-unionized employers – including McDonalds and other fast food chains, driven by rising income inequality and a decades-long decline in middle-class jobs.
Despite the raise, incomes for many Wal-Mart workers would still hover near the poverty line.
Nevertheless, in addressing other major complaints from workers, Wal-Mart said it would work to make scheduling easier and more predictable, and would also improve employee training. Together with the wage increases, Wal-Mart is investing $1 billion more in its employees, the retailer said.
“As important as a starting wage is, what’s even more important is opportunity, and we'll continue to provide that ladder that any of you can climb,” Wal-Mart CEO Doug McMillon said Thursday in a note to employees.
Material from The Associated Press was used to augment this report.