Walmart Wage Increase Likely to Start New Trend Toward Pay Equity

Walmart Wage Increase Likely to Start New Trend Toward Pay Equity


Better schedules, more training, and a wage increase up to $10.00 per hour – that’s what Walmart workers can expect beginning on April 1.


Last month, the world’s largest retailer announced that it was raising the minimum wage for it’s lowest paid workers in a tiered move that starts this year and will be completed by February 1, 2016.  In recent year, Walmart, and other retail and hospitality chains, were made the centerpiece of efforts to increase the minimum wage. With cities and states taking up the charge while Congress sits idly by, refusing to enact President Obama’s calls for a minimum wage increase, Walmart has take a bold step toward increasing opportunities for economic equity in this country.

By will this latest wage hike go far enough?  According to Daniel Gross, Executive Editor for strategy + business:

[pullquote_left]While going from $7.25 to $9 is a meaningful increase, a rise of 24 percent in one fell swoop, the number of people directly affected by the move is relatively small. The overwhelming majority of Walmart’s workers are paid above the minimum wage, and the average employee earns $12.85 per hour. The new pay structure will raise the company’s total wage bill by $1 billion—about what the retailer, which had global sales of $485 billion in 2014, racks up in 10 hours. One billion dollars of extra wages in a $17 trillion economy won’t solve the problems of income inequality and persistently low wages. A person working at $9 an hour, 40 hours per week, 50 weeks a year, earns $18,000 a year. The official poverty line in the U.S. for a family of three is $20,090. Nor does this extra $1 billion represent a massive loosening of Walmart’s purse strings. At its current dividend rate of $1.92 per share, Walmart is on track to pay out about $6.2 billion in dividends to stockholders.[/pullquote_left]

Even still, Gross argues, “a highly public move like the one Walmart just made can help alter the norms and the conversation surrounding wages.” Moreover, Walmart’s wage increase is expected to have a ripple affect in other large retailers across the nation. Edward Jones analyst Brian Yarbrough expects restaurants will also be affected by this change.  As noted in, “Wal-Mart is trying to reduce turnover among its 1.3 million U.S. workers, which would in turn cut training costs and improve service at its 4,400 domestic stores. With the unemployment rate dropping and jobs more widely available, Wal-Mart’s move may ripple through the retail industry.”

Once the new wage goes into effect this April, the average full-time hourly wage at Walmart will be $13.00 per hour (up from $12.85), while the average part-time hourly wage will be $10 per hour (up from $9.48).  The company is also increasing the compensation range for each of the positions they employ, and intends to provide raises to associates earning at the maximum of their pay band. ƒ Roughly 500,000 associates will receive a raise from these changes in the first half of 2014, and associates will continue to earn quarterly bonuses based on the performance of their stores.

In addition to the changes with Walmart’s workforce, including improvements to its training, promotion, healthcare, and benefits options for employees, Walmart and the Walmart Foundation will commit $100 million over five years to help fund programs designed to create career paths in retail and related industries (e.g. logistics, hospitality, wholesale) and train thousands of workers outside of the company.