Walmart's New Minimum Wage: Every Little Bit Counts
Daniel Gross
Editor, Author, Writer | Global Editorial Director, PwC | New book: A Banker's Journey
So a few months ago, I prophesied that 2015 would be the year that lots of deserving people finally get a raise. Why? The labor market was tightening, and new minimum wage laws were about to come into effect in several states. But there was something else afoot. Nearly six years into this expansions, I argued, CEOs and their colleagues would finally realize that it just isn't sustainable -- as a business strategy, as a public relations strategy, as an economic strategy -- to refuse to raise wages for line workers even as their own salaries rise.
Two months into the new year, that finally seems to be happening. In February, Wal-Mart, America's biggest private sector employer and a long-time poster child for stubbornly low-paying service jobs, announced it would effectively establish its own minimum wage. No associate would be paid less than $9 an hour, and next year the company minimum will rise to $10.
As I note in my column published this week in Strategy+Business -- read it here -- there's a little less to this than meets the eye. In state like California, for example, Walmart is already required to pay a minimum of $9 an hour. And Walmart will still be a low-wage company, even with the higher minimum. It's very difficult to get by in America on $9/hour, or on the $13/hour average that Walmart employees earn.
But the move is nonetheless important--for symbolic reasons, and for actual business reasons. Walmart helps set the benchmark for other big box retailers. So those who need to compete with America's largest retail employer may have to raise their in-house minimums accordingly. More significantly, Walmart is couching its pay raise as a smart business decision. Apparently, the company came to the conclusion that the stores' dreary customer experience could be improved if employees were more motivated. Imagine that!
In addition, as the economy improves, Walmart has found that each week, several thousand employees walk out the door for better opportunities elsewhere -- leading to higher turnover and training costs.
This may all sound very elementary -- if you want to attract good employees, if you want to motivate and retain them, it helps to pay better. But this is a fundamental business lesson that many companies seem to have forgotten in this current expansion.
CAMP. LADY CLINTON FOR AMERICA
9 年Walmart giving a raise, HA! You get a raise. They know nothing about the economy. So they get taxed more, still no insurance, just enough hours for Walmart not to give more benefits thus creating slaves, lack of customer service. I know I became my own secret shopper and three Walmart employees stated, "if they don't care about us, we ignore clients." They don't even know about their products. Every industry has the mentality that, "the door swings both ways, just like Target, Wells Fargo, other industries, Target, AT@T and specially WALGREENS CORP. THEY ARE THE WORSE. WALGREENS DOWNTOWN EL PASO, TEXAS HIRE A TYPICAL MEXICAN TO PAY THE UNEDUCATED WHATEVER THEY WANT.
Administrative Assistant
10 年Therefore, it matters not if you shop at Walmart or not and this is true with many big corporate stores. Employees (especially in retail) are tools: disposable, replaceable and if they don't smile and say it's great to work here ... you get laid off with no unemployment benefits.
Leadership | Business Growth | Strategic Partnerships | Fintech | Payments | Consulting | Operations
10 年What they aren't telling you, but any employee at Walmart will as you are checking out, is yes they increased their pay which is great, but they reduced most full-time to part-time cutting hours and eliminating health insurance because of Obamacare, now forcing them to pay for health insurance. In the end, the employee is making less money and Walmart is making more money!
Homemaker
10 年While this at first glance may seem good, I would look at the effects before coming to that conclusion. This will most assuredly drive up cost on all products which means all people on fixed incomes will be hurt by this increase. It doesn't tackle the fact that middle class jobs are disappearing. It doesn't address the real issue, which is we need real jobs that make things that we can export. It also doesn't address that Wal-Mart has squeezed out a lot of competition in this country by controlling the shelves.