On February 19, Walmart Stores, Inc. announced that it would raise wages for roughly a half-million full-time and part-time employees at its Walmart and Sam’s Club stores over the coming year. The retail giant will increase pay to $9 an hour - $1.75 above the federal minimum wage - this April and to $10 on February 1, 2016. With the increase given to its lowest-paid workers, the company will also raise the wage rate paid to employees who already earned above minimum wage. For example, a “Department Manager” will now earn a minimum wage of $13 per hour this year and $15 next year. Walmart expects the raises to cost approximately $1 billion a year.
The importance of this announcement cannot be overstated. Walmart is the biggest private employer in the United States, with 1.3 million workers, and had been one of the prime targets of labor activists seeking an increase in the minimum wage. This campaign has garnered substantial support and momentum. As we had previously informed, fifteen states, the District of Columbia and several cities and municipalities have raised their minimum wages. President Obama called on Congress to raise the federal minimum wage to $10.10. Other large retailers had also previously raised their minimum wages. Last year, Gap announced it would increase pay to $10 an hour by this year, and IKEA said it would raise minimum hourly wages to $10.76. Walmart’s decision will almost certainly be touted by campaign organizers as their biggest victory yet.
The retailer says it is also working to improve its benefits and sick-leave policy, give employees more control over their schedules and make it easier for employees to advance within the company. It will also revise its hiring, training, compensation and scheduling programs. All of these initiatives are part of a concerted effort by company CEO Doug McMillon to improve customer service by attracting better employees and increasing productivity. “We’re all associates,” McMillon said. “Today’s cashiers will be tomorrow’s store or club managers. Today’s managers are tomorrow’s vice presidents. Tomorrow’s CEO will almost definitely come from inside our company.”
Walmart’s decision could put more pressure on employers and lawmakers to follow suit. As we have been reporting, other large private employers, including several retailers and large fast food companies, have also been targeted by minimum wage campaign organizers, in their ongoing series of strikes and protests throughout the nation. However, none of these companies has revealed plans to raise pay.
The pressure on Walmart’s competitors, both in the retail and the fast food industry, will be continuous. A large discrepancy in pay structure could serve as a competitive advantage for Walmart in the job market. Walmart is positioning itself to recruit and retain better employees, which will improve productivity and temporarily satisfy the affected employees. The stakes have definitely been raised for private employers.
We will continue to monitor any further developments in the ongoing campaign to raise the minimum wage. For more information, please contact Robert W. Mulcahy at RWMulcahy@michaelbest.com or 414.225.2761.