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Walmart Raising Wages – What it Means

February 20, 2015
Plain English Version
Gunnar Rathbun—Invision for Walmart

Gunnar Rathbun—Invision for Walmart

Walmart is the largest private employer in the U.S., with 1.3 million workers. It is raising wages for 500,000 workers. The federal minimum wage of $7.25 an hour is earned by only 6,000 Walmart workers.Walmart’s part-time workforce now earns an average wage of $9.48. Full-time workers earn an average of $12.85. However, many earn less than the average wage. The workforce is split evenly between full-time and part-time workers.

All of Walmart’s U.S. workers will earn at least $9 an hour by April and at least $10 by next February. The company said about 40 percent of its workforce, including those at the Sam’s Club outlets, will be affected. The raise will be less than a dollar an hour for most of these workers.

Big deal? Yes and no. Experts say there are two reasons why Walmart is doing this. The first reason is that Walmart is having a harder time finding workers. The second reason is that Walmart is suffering from high employee turnover.

Some observers say that another reason for the proposed raises is that the company  has been embarrassed into giving the raises. Company executives hinted that the raises are the right thing to do as a moral matter. (Read… “good publicity.”)

An executive at Walmart said it would work to make scheduling easier and more predictable for part-time workers. Employee training will be improved as well.

Retailers like the Gap and Ikea are raising wages. Costco’s hourly wages are near $20 an hour. Walmart is a huge player. Its decision to increase wages may well influence other large chains like Target and Home Depot to follow suit.

Meanwhile, the federal minimum wage is stalled at $7.25 an hour since 2007. It looks like Congress will not act to raise it. Twenty-nine states and some cities have acted to raise minimum wages.

There is little doubt that worker demonstrations have had an effect on the companies. The threats to organize and to strike are being heard. Wage levels for hourly workers are trending up.

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