As the Retail Labor Market Remains Tight Walmart Boosts the Minimum Pay

Main Points:

• Walmart is increasing the minimum wage for shop employees to $14 per hour.
• The retailer's U.S. average wage is anticipated to increase to around $17.50 beginning in early March.
• The nation's largest private employer is also enhancing its program for college tuition and adding additional well-paying positions at its auto shops.

At a Wal-Mart Stores Inc. site in Los Angeles, California, a worker arranges gift boxes of cosmetics that are being sold there. Patrick T. Fallon | Bloomberg | Getty Images

The minimum wage for workers in Walmart stores will increase to $14 per hour on Tuesday, a 17% increase for those who stock shelves and serve customers.

Store staff will start earning between $14 and $19 per hour in early March. Currently, according to Anne Hatfield, a spokesman for Walmart, they make between $12 and $18 per hour.

According to a statement sent to all employees on Tuesday by Walmart U.S. CEO John Furner, with the change, the retailer's average wage in the United States is anticipated to be higher than $17.50.

According to Hatfield, the change will result in pay increases for some 340,000 shop employees. For the 1.6 million workers at Walmart, that translates to a wage raise of about 21%.

The nation's largest private employment and retail behemoth is raising compensation at an intriguing time. Recession predictions are made by certain economists. Leading internet firms, media outlets, and institutions, including Google, Amazon, and Goldman Sachs, have made thousands of layoffs and raised concerns. Retailers, like Macy's and Lululemon, recently warned investors about a difficult year ahead due to lower sales trends.

But up to now, employment cutbacks have mostly been avoided by retailers. Instead, they continue to struggle with a competitive labor market.

Gregory Daco, chief economist at EY Parthenon, the international strategy consulting division of Ernst & Young, noted that the retail sector has higher turnover than other sectors, which enables employers to control headcount by delaying the backfilling of positions.

But he also suggested that shops might be making cautious plans. They have had to put in more effort to hire and keep employees during the last 18 months. He warned that losing too many workers could make hiring and training replacements expensive.

Any retailer will need to consider hard and twice before letting a significant portion of their staff leave, he said.

Furner stated in Walmart's employee memo that many employees' annual raises will include the wage boost. According to the corporation, some of those salary increases will also be given to store employees who operate in regions of the nation where the labor market is more fiercely competitive.

Walmart is also improving additional benefits to entice and keep workers. Furner stated that the organization's Live Better U program, which pays tuition and fees for part- and full-time employees, is expanding to include additional college degrees and certifications. It is also hiring people to work as truck drivers, a position that can earn up to $110,000 in the first year, and adding additional highly-paid positions to its vehicle care facilities.,