More than 1.2 million Walmart U.S. and Sam’s Club associates are slated to receive pay increases under the second phase of the Bentonville, Ark.-based company’s two-year, $2.7 billion investment in workers.
The pay raise, which takes effect Feb. 20, would be “one of the largest single-day, private-sector pay increases ever,” the retailer claimed in a press release. Walmart is also implementing new short-term disability and simplified paid time off programs.
“We are committed to investing in our associates and to continuing to simplify our business,” said Judith McKenna, chief operating officer for Walmart U.S. “When we do so, there is no limit to what our associates can accomplish — our customers and associates are noticing a difference. We’re seeing strong increases in both customer experience and associate engagement scores.”
The changes taking effect include, among other things:
- All employees hired before Jan. 1 would earn at least $10 an hour.
- New entry-level employees would continue to start at $9 an hour and move to at least $10 an hour after successfully completing a training program.
- The starting rate of non-entry level hourly pay bands would be raised. Anyone earning below the new minimum would automatically move up to the new minimum.
- Associates at or above their pay band maximum would receive a one-time lump sum payment equal to 2% of their annual pay.
When these changes go into effect, Walmart’s average full-time hourly wage will be $13.38 an hour, and the average part-time hourly wage will be $10.58 an hour. The federal minimum is $7.25.
Walmart and Sam’s Club are also launching a new, simplified paid time off policy, effective March 5, that would streamline paid vacation, sick time, personal time, and holiday time into one category. Moreover, the one-day wait to use sick time would be eliminated. When the plan rolls out in March, both full- and part-time employees would earn PTO based on tenure and hours worked.
“The move highlights how Walmart and other employers are responding to a tight labor market with the U.S. unemployment rate at a 7-1/2 year low of 5%,” Reuters wrote. “Walmart has said its investment in wages is depressing profits; labor costs were a main factor behind an earnings warning in October.”
The announcement came just a few days after Walmart said it was closing 269 stores, including 154 in the United States, eliminating some 16,000 jobs at closed stores globally. The retailer said it would try to transfer many workers to nearby stores.
Labor groups are demanding that Walmart pay an even higher “living wage” of $15 an hour.
Jessica Levin, a spokeswoman for the union-backed group Making Change at Walmart, told Reuters that she was skeptical that employees would see much benefit. Levin cited reports from workers who saw their hours cut after the initial wage hike last year or who received a smaller annual raise than they might have due to changes in the calculation of yearly performance-based hikes.