On Thursday, retail giant Walmart announced it will raise worker pay for 425,000 workers beginning March. This will raise average Walmart worker pay to more than $15 per hour. However, starting wages will remain at $11 an hour. The company’s total US workforce numbers at 1.5 million people, making it the country’s largest non-government employer.
Earnings Fell Short
Walmart made the announcement as it reported it missed Wall Street estimates. Stock prices fell as much as 6.2% as the company expects profits to dip slightly and sales growth to slow. The retail giant’s fourth-quarter earnings generated a mixed bag. Revenue came through as Walmart generated $152.1 billion over a $148.4 target.
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However, earnings per share dropped to $1.39, which is 11 cents short of the target 1.50. Losses from Walmart’s the UK and Japanese operations drove the bulk of the shortfall and plunged the company into an unadjusted quarterly deficit. More importantly, Walmart warned that revenue growth will slow through the next fiscal year. In addition, Walmart foresees that profits will slightly decline. Meanwhile, Walmart announced in late January that it will increase its number of stores that will serve as local fulfillment centers. These are condensed modular automated warehouses built within a store or added to a store. They house pantry items, frozen foods, consumables as well as electronics.
Walmart To Raise Worker Pay
CEO Doug McMillon said that beginning March 13, Walmart will raise worker pay for digital and stocking positions. Rates will become between $13 to $19 an hour, depending on the store location. McMillon, who is also chairman of the influential Business Roundtable, previously said that the company agrees that the federal minimum wage should go higher. However, he noted geographic differences also need consideration.
Walmart and Sam’s Club workers also received a couple of COVID-19-related bonuses the past year. Last September, Walmart announced it will give approximately 165,000 hourly workers a raise. They will also provide “cross-training opportunities” and introduce new leadership roles.
Meanwhile, rivals Amazon and Target already adjusted their starting pay to $15 an hour. Kroger, another major US retail chain, responded to Walmart’s move. “We welcome Walmart’s announcement to bring their average wage up to $15 an hour. At Kroger, our average hourly wage has been $15 an hour since 2019. In fact, our average hourly associate rate reaches over $20 an hour when accounting for health care, 401(k), and pensions that so many of our competitors choose not to offer,” a company spokeswoman said.
Continued Raises Over Time
McMillon also said Walmart will continue to raise its minimum wage over time. However, pay raises will vary based on where the store is based. Instead of hiking wages across the board, he said it will prioritize pay raises to employees with key roles or more tenure. McMillon wants to ensure Walmart jobs create a career path for workers at the company.
“What we’re trying to do is put together the opportunity for our associates to climb a ladder,” he said. In fact, he himself started at Walmart as an hourly worker. He is joined by about 75% of store management who joined Walmart as hourly workers.
More Pay Due to More Risk
Retail companies remain under pressure to pay employees more, as the Biden administration pushes for increased pay. Congress and the White House are looking at hiking the federal minimum wage to $15 from $7.25 per hour. Meanwhile, half of US states raised their minimum wage rates earlier this year.
The pressure is also coming from workers, as they found themselves at the frontlines during the pandemic. With a sizable percentage of the population choosing to order online instead of braving the streets, more store and warehouse workers needed to remain at work. Workers needed to take an additional risk of contracting COVID-19 and spreading it to family members.
Watch the Reuters news video reporting that Walmart raises wages for 425,000 employees, and sees a sales slowdown in 2022:
Do you agree with Walmart’s strategy to raise its workers’ pay based on location? Or do you agree more to a unilateral $15 per hour increase like what its rivals did? Let us know what you think about increasing pay for frontline retail workers. Share your thoughts in the comment section below.