Analysts expect Wal-Mart Stores Inc.’s decision to raise its minimum wage for more than 500,000 employees to at least $10 per hour will have a cascading effect on other large retailers throughout the nation, including Target Corp. and Kohl’s Corp.
Bentonville, Ark.-based Wal-Mart, one of the largest employers in the nation and in Wisconsin, said its pay raises will apply to both full-time and part-time workers at U.S. Walmart stores and Sam’s Clubs. In April, their wages will rise to $9 an hour, which will be $1.75 an hour above the current federal minimum wage. By Feb. 1 of next year, their pay will rise to at least $10 an hour.
The company said workers also will have more control over their schedules but declined to give details of those changes. In addition, the firm said it will invest more in training to give entry-level workers greater chances for promotions and other career advancements.
“Today, we announced comprehensive changes to our hiring, training, compensation and scheduling programs, as well as to our store management structure. These changes will give our U.S. associates the opportunity to earn higher pay and advance in their careers. We’re pursuing a comprehensive approach that is sustainable over the long term,” said Wal-Mart chief executive officer Doug McMillon.
The wage scale and other improvements will cost the company about $1 billion this fiscal year.
Wal-Mart’s pay and employment policies have been the focus of protest by many workers and outside labor groups seeking to organize its employees.
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.
“Target will feel the pressure to respond,” Burt Flickinger, managing director at Strategic Resource Group in New York, told Bloomberg News. “It’s a competitive market for workers.”
“This is the largest retailer out there so I think others are going to have to follow,” Brian Yarbrough, analyst at Edward Jones, told Reuters. “All the restaurants are going to be under pressure as well.”
In response to a question from BizTimes, Molly Snyder, spokeswoman for Minneapolis-based Target, said, “At Target, we remain committed to offering market competitive wages that can help attract and retain great talent. As a leading employer, we will continue to work to balance the needs of working Americans while maintaining a healthy business environment conducive to job creation. We already pay above the federal minimum wage at all of our stores nationwide. However, we typically don’t provide specific details on our compensation and benefits programs.”
Representatives from Menomonee Falls-based Kohl’s Corp. did not return calls for comment.
Efforts to increase the federal minimum wage, supported by President Barack Obama, have stalled in Congress.
