Business

Wal-Mart hikes minimum wage to $9/hour

by Vicki Needham - 02/19/15 9:22 AM ET

Wal-Mart announced Thursday that it will raise its starting wage to $9 an hour in U.S. stores, beginning in April.

By February 2016, Wal-Mart said all of its associates will make at least $10 an hour — $1.75 above the federal minimum wage of $7.25.

Wal-Mart is the nation’s largest employer, with 1.3 million people on its U.S. payrolls; as many as 500,000 people could be affected by the change. In recent months, company leaders have said that fewer than 6,000 workers in its stores are making the federal minimum wage.

{mosads}In addition to the pay raises, Wal-Mart CEO Doug McMillon said the company will provide more flexible scheduling while launching training programs that help associates move from entry-level positions to jobs with more responsibility that pay at least $15 an hour.

“We made the decision that this is the right investment to make to create a customer experience that exceeds their expectations,” McMillon said on a press call.

McMillon said the company wants associates who care and “are highly engaged in our business and are leaning in.”

“Those feelings that those associates have generate a customer experience that drives growth.”

He said the plan to invest more in Wal-Mart workers — the pay raise will cost the company $1 billion — will reduce turnover and ultimately strengthen the business.

Under Wal-Mart’s new pay policy, full-time employees will move up from an average of $12.85 per hour to $13, while part-time employees who make an average of $9.48 will move up to $10, company officials said.

The retail giant has been under enormous pressure to raise its wages amid the fierce debate over the federal minimum wage in Washington.

Advocacy groups have targeted Wal-Mart while pressing for expanded worker rights and pay hikes to reduce income inequality. Protests involving Wal-Mart workers have included demands for pay of at least $15 per hour.

“We know that this wouldn’t have happen without our work to stand together with hundreds of thousands of supporters to change the country’s largest employer,” said Emily Wells, a leader of OUR Walmart, a group of Wal-Mart workers that has been fighting for higher wages and more flexible hours at the retailer.

Still, the group argued that the plan falls short of what is needed.

“With $16 billion in profits and $150 billion in wealth for the owners, Wal-Mart can afford to provide the good jobs that Americans need — and that means $15 an hour, full-time, consistent hours and respect for our hard work,” Wells said.

The Obama administration and Democrats in Congress have pressed for a nationwide increase in the minimum wage to $10.10 an hour. Pressure has also come from the states, several of which have approved minimum wage hikes.

A poll released on Thursday showed that 60 percent of Americans want a higher minimum wage, according to a new Associated Press-GfK poll.

Business groups have fought an increase in the minimum wage. The National Retail Federation called Wal-Mart’s decision “another example of the power of the marketplace” to raise wages without an order from Washington.

“Like many other retailers, Walmart made its decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate,” said NRF President and CEO Matthew Shay.

“Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery,” he said.

Wal-Mart reported fourth-quarter earnings of $1.61 a share on Thursday. The company’s fourth-quarter U.S. sales increased 1.5 percent, while revenue for the fiscal year reached $485.7 billion.

Wal-Mart’s stock price fell at the opening bell on the news, dragging down U.S. indexes.

— Updated at 12:50 p.m.