Wal-Mart Stores will begin paying all of its US hourly workers at least $9 an hour by April and $10 an hour by next February, striking back at critics who say it underpays employees.
The plan will result in raises for about 500,000 full- and part-time workers in the first half of the current fiscal year, the Bentonville, Arkansas-based company said Thursday in a statement. The retailer also forecast profit for the current year that was less than analysts estimated.
Wal-Mart, the largest private employer in the US, has long been criticized for its labour practices. Workers have staged protests on Black Friday, one of the busiest shopping days of the year, seeking better working conditions and higher pay. The company also was ridiculed following a report that a store in Canton, Ohio, was holding a food drive that asked employees to donate items to fellow workers.
The pay of $9 an hour is $1.75 higher than the federal minimum wage. Wal-Mart employs about 1.3 million workers in the US, where it has about 4,400 locations.
With the pay increase, Wal-Mart is looking to reduce its workforce’s turnover, cut training costs and improve stores, while also fending off negative publicity about its wages, said Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis.
“This forces all retailers to take a look at their pay levels, but definitely Target,” he said. “They have to be competitive.”
McMillon, who took over as CEO a year ago, has added more fresh produce to US stores, an effort that’s proving popular with shoppers. Falling unemployment and the plunge in fuel prices also are putting more money in consumers’ pockets.
“The precipitous drop in gas prices should translate into consumer spending as we progress throughout 2015,” Charles Grom, an analyst at Sterne, Agee & Leach Inc., said in a report.
Bloomberg News, edited by ESM
