Walmart employees to get raises

Hadley Malcolm | USA TODAY

After years of employee protests and outrage over meager pay, Walmart said Thursday that it will spend $1 billion this year to give raises to half-a-million workers.

About 500,000 full- and part-time associates at both Walmart and the company's Sam's Club warehouse stores will start making $9 an hour or more in April. The world's largest retailer made the announcement Thursday as part of its fourth-quarter earnings report. That's at least $1.75 more than the federal minimum hourly wage of $7.25. By February 2016, hourly employees will make at least $10 an hour after completing about six months of training.

CEO Doug McMillon said that the decision to hike wages was made as part of a strategy to retain employees and improve customer service.

"We want associates that care about the company and are highly engaged in our business and are leaning in," he said. "Those feelings generate a customer experience that drives growth."

Walmart shares closed down 3.21% in afternoon trading to $83.52.

Walmart employs more than 1.3 million people in the U.S. Of the 500,000 employees getting raises, approximately 6,000 currently make the federal minimum of $7.25 an hour, says spokesperson Kory Lundberg. The remaining 494,000 employees getting raises are either making between $7.25 and $9 an hour, or more than $9 an hour and are getting raises to meet new minimum or maximum pay grades for certain positions.

Full-time employees currently make an average of $12.85 an hour, and part-time employees make an average of $9.48, Lundberg says. Those averages will increase to $13 and $10 respectively under the new plan.

The announcement comes as Walmart has experienced declining store traffic for months and has lost some of its edge as a leader on price, as dollar stores, Amazon, Target and other rivals become more competitive.

Walmart has also been called out over the years by employees and advocacy groups for not paying employees enough to live on and employees having to seek welfare assistance. Protesters most recently flanked stores during the holiday season, particularly around Thanksgiving and Black Friday, to push for higher wages.

Anthony Rodriguez, a 26-year-old store associate in Rosemead, Calif., has participated in several protests as a member of OUR Walmart, a labor union-backed employee advocacy group. He currently makes $9.40 an hour after eight months with the company. He'll make $10 an hour when the minimum wage goes up next February.



"It's a great start," he said about the wage increases. "I think Walmart is starting to realize that we will not stay quiet and we will keep pushing forward, and they have to acknowledge that."



The move could also ultimately lead to higher foot traffic and sales at Walmart, which hasn't been able to sustain significant sales momentum since the recession, says Brian Yarbrough, analyst with Edward Jones. Same-store sales for the year ended Jan. 30 increased just 0.5%, compared with a 0.6% decline for the prior year.



"If you look at retailers that invest in their people and pay more … these businesses tend to have much more consistent and better sales trends," Yarbrough says.

Yannet Lathrop, a policy analyst for the National Employment Law Project, says Walmart's move is, "definitely a step in the right direction." But she added, "It's not enough to raise people above poverty," noting that a $10 hourly wage provides a worker an annual salary of less than $21,000. "(Workers) will continue to struggle," she says.

But Josh Bivens, director of research and policy for the Economic Policy Institute, called the bump in pay "a tangible raise," noting that affected workers could receive an additional $2,000 a year.

He says the pay hike is likely to have a ripple effect on retailers who previously said boosting wages would make them less able to compete with Walmart on price. "At the very least, it takes away that excuse from other retailers," he says.

In a statement to USA TODAY, Target said it already pays above federal minimum wage at all of its stores but would not provide specific figures. "We remain committed to offering market competitive wages that can help attract and retain great talent," the company said.

Lathrop and Bivens largely attribute Walmart's move to protests in recent years by OUR Walmart, which has called for a $15 hourly wage.

The wage rallies — along with similar demonstrations by fast-food workers across the country — have raised national awareness about the plight of low-paid employees and helped spark minimum-wage increases in many states, Lathrop and Bivens say.

This year, 20 states have raised their pay floors, leaving 28 states above the federal minimum. Minimum pay is scheduled to rise in Alaska next week and in Delaware on June 1.

Walmart also announced a $100 million commitment over five years toward career training for entry-level workers. That includes a training program Walmart has been piloting to teach new employees skills such as communication, merchandising, customer service and the basic financials of retail, said Greg Foran, president and CEO of Walmart U.S. Walmart also recently made changes to its 401(k) retirement accounts, allowing employees to contribute from day one on the job instead of having to wait a year.

"There is a holistic approach to creating an environment where people want to work at Walmart and want to stay at Walmart," McMillon said. "The wage market has always been competitive. We make adjustments like this to make sure we can attract and retain the talent we need."