Posted on 02/20/2015 7:48:48 PM PST by E. Pluribus Unum
Walmart, the world’s largest retailer, will raise its base hourly wage to $9 beginning in April. By the following February, all employees will make at least $10 an hour. That’s $2.75 above the federal minimum wage of $7.25, which hasn’t budged since 2009, and it’s close to the $10.10 minimum wage proposed by President Obama. About 500,000 Walmart workers will get a raise as a result of the change.
Not surprisingly, Walmart’s stock immediately fell about 3 percent to $84 a share, as investors digested the news of higher costs. Executives at the retail giant warned that spending more money on wages would result in a hit to earnings, which would also be hurt by e-commerce improvements and training programs for its workers.
So why did the company do it, knowing a short-term hit was coming?
The simple reason is that the improving job market left it with little choice.
Related: Americans Are About to Get a Nice Fat Pay Raise
Walmart’s pay hike “is testimony to the fact that the job market is strengthening,” says Gary Burtless, a labor economist at the Brookings Institution. “The competition Walmart is facing for filling its positions is intensifying in most parts of the U.S. and its base wage rate was low enough that they are probably not getting as good an employee as they would wish to have.”
That’s pretty much what Walmart CEO Doug McMillon said announcing the move in a letter to employees on Thursday. “When we take a step back, it’s clear to me that one of our highest priorities must be to invest more in our people this year,” he said.
By raising wages and providing more opportunities for advancement and better schedules, the company can improve employee morale and attract higher caliber workers. Walmart says it has tested different programs in its stores and believes it has landed on the right mix of better pay and training.
Related: 5 Million Job Openings, So Why Can’t You Get Hired?
The retailer is also counting on the changes to quickly improve the shopping experience at its stores, which most surveys show is getting worse. One released Wednesday by the American Customer Satisfaction Index gave Walmart its lowest rating since 2007. The retailer scored the worst of any department or discount chain and much lower than 10 to 15 years ago, when it ranked well in the survey.
Walmart has always strived for the lowest prices and best deals, but that’s not enough when shopping is a bad experience. In a research note, analyst David Schick of Stifel, Nicolaus & Co. called the pay hike, “a meaningful change in strategy.”
Walmart execs believe the hit to profitability will be short-term and the improved customer service will lead to long-term growth. While it may lower earnings per share, it should improve operations, wrote Schick.
Indeed, unionized supermarkets and some stores like Costco, which pay higher wages, typically have better customer service, points out Burtless. “It’s more enjoyable to shop in stores that pay their employees better wages,” he says.
Related: American Express Takes a Beating over Costco Split
And there are other benefits to Walmart’s move. First, there is all the favorable publicity. Schick believes it could “create leverageable buzz.”
Then there is the potential for a direct increase in sales from all those Walmart associates earning more. Walmart is the largest employer in many of the regions where it operates stores. Burtless points out that the pay hike “will have a tangible effect on those local economies and most of those benefits will accrue to Walmart.”
there are still an acknowedged 93 million Americans without regular work
Investors will get over the rise in income. Where else are people going to shop in small town America?
Cue the Walmart-hating liberals: “It’s not enough!!!”
It never is ...
gotcha
thanks
> This article makes no sense. There has to be another reason, an ulterior motive. I won’ hold my breath for the answer.
Those illegals that came into our country this last year...they’ve all got new jobs!.../s
That’s pretty much it. You can’t sell stuff that’s not on the shelves. You need to retain the worker bees that move the freight. Most of that is done on night shift. Walmart has had a tough time finding candidates that can pass a drug screen. They’re hoping the higher wages will help attract people that can.
Retaining people also keep those that can stock faster. Even though Walmart uses Telexons that can scan a bar code and most of the time pinpoint the shelf location, it’s faster if you know where on the shelf something goes. I doubt most people have a clue about how much freight a good stocker can move in a night. Walmart does.
With all of the endless government give always, WM has to make actually working a better deal than sitting at home leaching off the taxpayers.
I would agree. I suspect it's related to their recently cancelling healthcare plans for most employees - maybe the pay raise is merely the former employer portion of their previous insurance fees being added to their pay. Or maybe it has something to do with wanting 'To Be The Number One Healthcare Provider In The Industry' .
Good luck to any employer trying to get workers by outbidding uncle sugar’s welfare cheques Ha! (Can it even be done?)
The other day I stopped in Target to pick up a couple of things. I don’t usually shop Target, but I’d checked Walmart and they didn’t have the specific item I needed.
I asked the Target employee for the item I needed, as it wasn’t in the location another employee had sent me to. He pulled out his/an iPhone, scanned the empty shelf’s barcode...and said..”We don’t have any of those in stock, right now”. I was pretty impressed with that.
I’m not sure where Walmart has their database. I know when Bentonville does something at night we can’t scan the barcode and get the inventory info. Normally any Walmart employee can use a Telxon and tell you if something is in the back room. That doesn’t mean it can be accessed immediately due to the height of the pallet racks. If it’s on a lower one, there should be no reason they couldn’t get it.
If a customer comes within ten feet of a Walmart associate the associate is supposed to ask them if they need assistance and help them with what they need.
The illegals here in North Texas, the ones who day labor and congregate at the (city-provided!) “day-labor gazebo,” were getting $10/hr 15 years ago, and they get a sight more than that now!
My wife used to work at a cabinet shop near here that employs illegals almost exclusively, and has to pay them over $20/hr or they’ll go elsewhere.
And taxes? What taxes? They *all* claim 15 or more dependents so their withholding is almost 0.00
> And taxes? What taxes? They *all* claim 15 or more dependents so their withholding is almost 0.00
Since I pay so much in taxes to pay for all their benefits (and I get none) can I claim THEM as dependents?
There’s that argument we keep hearing that “oh, the wetbacks pay their taxes because of federal withholding...”
Like hell they do!
> This article makes no sense. There has to be another reason, an ulterior motive. I won’ hold my breath for the answer.
Reason # 2 - Walmart, being the largest retailer in the world, was selected to field test the new Beast PayMaster System with the public for them. So now you’ll no longer have to worry about carrying all those credit and debit cards and remember those PINs. Just fill fill out the one time application and receive the invisible stamp on your hand or forehead. Now just simply wave your handor forefead over the Beast Paymaster scanner and pay for your goods.
Wal-Mart thinks their competitors cannot afford to compete with their new pay scale
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