Wal-Mart to give pay raises to most of its workers

Starting February 20, every Wal-Mart and Sam’s Club employee hired before January 1, 2016, will earn at least $10 per hour, the company announced Wednesday.

Under the plan, the biggest retailer is raising hourly wage to least $10 per hour for around 500,000 employees hired before Jan 1, 2016. Hourly wages for full-time Walmart employees will increase from an average of $13 to $13.38 (and for part-time employees, the average wage will go from $10 to $10.58.) Unfortunately, that’s still lower than the average for USA retail workers, which according to the Labor Department is $14.95. The wage increase will affect almost 1.2 million US employees at the company’s Wal-Mart and Sam’s Club stores.

While denting profits near term, Wal-Mart has said the investments are helping improve customer service and worker engagement scores.

The raise comes as the nation’s largest retailer works to fulfill a commitment to increase its minimum hourly wage. Heavy spending in wages and e-commerce fulfillment efforts are a huge drag on Wal-Mart’s earnings as the retailer recently forecast between a 6% to 12% earnings dip this next year.

Current employees have criticized the firm for unevenly spreading pay raises, saying that the higher pay given to new employees was bringing their pay close to that of long-time workers. The minimum pay for assistant store managers will also be increased, moving to $45,000 a year.

“Actively managing our portfolio of assets is essential to maintaining a healthy business”, said Wal-Mart president and chief executive Doug McMillon. As part of that, the company outlined Wednesday plans to offer workers one bucket of paid time off instead of different ones for vacation, sick, personal and holiday. Anyone earning below the new minimum would automatically move up to the new minimum.

— Workers who are at or above their maximum pay band will get a one-time lump sum payment equal to 2 percent of their annual pay.

The largest private employer in the US notes the latest move will shrink the gap between the lowest paid and more senior employees. Any unused amounts above those hour limits will be paid to employees on the first paycheck in February, the company said. But the company said it is a price it is willing to pay.

According to Rowley, the turnover rate – the share of part-time workers who leave within a year – is now 67 percent for the retail industry, up from 50 percent during the recession. Walmart is also offering an enhanced version of the plan, which costs less than the company’s previous voluntary plan and provides more coverage.