Wal-Mart, the largest private employer in the country, said on Thursday that it would increase wages for a half-million employees, a move that comes amid persistent scrutiny of its labor practices and high employee turnover.
The retail giant, which for years has been the target of widespread criticism over its low pay structure and increasing reliance on part-time workers, said all of its U.S. workers would earn at least $9 an hour by April and at least $10 by next February. Some labor advocates, however, who are demanding $15 an hour for service workers, called the plan inadequate.
The pay raise also signals that a tightening job market — with the unemployment rate now at 5.7 percent, compared with 9.8 percent five years ago, is leading to higher wages. Wal-Mart has had significant trouble retaining employees in a job market where its competitors like Costco Wholesale offer better wages.
The wage bump by Wal-Mart, which has long been a pay laggard, could simply mean that wage increases are finally an inevitability for low-wage workers in America.
"We’re finally going to see a wage creep, and Wal-Mart is trying to get out in front," said Ann C. Hodges, a labor relations expert at the University of Richmond. "They’re thinking: We’re probably going to do this anyway."
While the company said about 40 percent of its workforce, including those at the wholesale Sam’s Club outlets, would be affected, many of those raises will amount to much less than a dollar an hour more. About 6,000 employees receive the federal minimum of $7.25 an hour. Wal-Mart says its part-time workers already earn an average wage of $9.48, and full-timers an average of $12.85.
Wal-Mart lags major retailers like Gap and Ikea, which have moved recently to set hourly wages at or above $9, to try to reduce turnover and attract more workers. Even those higher pay scales fall short of compensation offered by Costco, known to offer wages closer to $20 an hour, or the Container Store.
But Wal-Mart’s move could force other major retailers like Target and Home Depot to follow suit. "Wage increases could be imminent for other companies," said Oliver Chen, retail analyst at Cowen & Co. in New York. Twenty-nine states exceed the federal minimum, which has not risen since 2007, according to the National Conference of State Legislatures.
Wal-Mart shares closed down $2.77, or 3.2 percent, at $83.52.