Dive Brief:
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Wal-Mart Stores Inc. said Wednesday that most of its hourly employees in its U.S. Wal-Mart and Sam’s Club stores—some 1.2 million people—would receive at least a 2% raise in pay, including those already earning better than minimum wage.
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The move is an effort to attract and keep workers at a time when jobs are more plentiful and workers a bit more picky. It also addresses complaints from existing workers that newcomers were receiving better pay under the retailers’ wage boost plans, planned for February. Some 500,000 hourly Wal-Mart employees leave each year, and the company hopes to stanch that with better pay and training.
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Even with minimum wages rising in 20 U.S. states and several cities, and including Wal-Mart’s pay boost plans, the company’s average hourly earnings are $13.38 for full-time store workers and $10.58 for part-time workers, both below the average $14.95 per hour retail workers earned in December, according to the Bureau of Labor Statistics.
Dive Insight:
Keeping wages low was a strategy from the beginning for Wal-Mart, part of Sam Walton’s approach of disrupting the retail industry and appealing to customers with “Always low prices.” And the retailer has garnered criticism for that approach, from worker advocates but also from states and fiscal watchdogs who found that Wal-Mart employees were a significant drain on taxpayer-funded social welfare programs.
But now the company is paying catch up, and, in order to follow through on plans to clean up stores and cater to wealthier customers—a move already paying off with customers—it needs store employees that are happy and well trained.
Turnover is a real problem at the retailer. In addition to better wages and training, it’s changing other policies, like paid time off and advancement opportunities, according to Wal-Mart U.S. COO Judith McKenna, who said, “Wages are only part of it.”
The situation is in contrast to Costco, a smaller company than Wal-Mart with a host of other differences, but which pays its hourly store workers a living wage (well above minimum wage), offers good benefits, and enjoys a reputation for good customer service in stores.
