Walmart Raises Hourly Wage From $12 To $14

Walmart Inc. WMT 0.27% said it is raising wages for its US hourly workers at a time when the market for frontline workers remains tight.

Beginning next month, Walmart’s US workers in stores and warehouses will earn a starting wage of at least $14 an hour, up from $12, the country’s largest private employer said in a memo to employees on Tuesday. Competitors including Amazon.com Inc. AMZN -1.23% and Target Corp. have a minimum wage of $15 an hour, while Costco Wholesale Corp.’s minimum wage is is even higher.

The state minimum wage is $7.25 an hour. Twenty states have no higher minimum wage than the state minimum wage, which was last raised in 2009, according to the Labor Department.

Walmart’s changes, the latest in a series of increases by the company to close the gap with its peers, will take the company’s average hourly wage to over $17.50. Currently, hourly workers at Walmart make an average of about $17, a spokeswoman said.

The US job market was tight, with an unemployment rate of 3.5% in December, a decade-low. There are signs that the job market is losing momentum as hiring and wage growth slowed in December, although the number of job vacancies still far exceeds the number of unemployed.

There were 10.46 million job vacancies in the US in November, federal data show. Of those, 887,000 were in retail and 1.52 million in leisure and hospitality – industries that often compete for the same workforce. According to the latest data, nearly a quarter of the available jobs in the US were in these two lowest-paying sectors.

More than half of the states in the US will raise their minimum wages in the coming year, although the tight labor market in many cases requires employers to offer wages well above the statutory minimum wage in order to attract and retain employees.

Average hourly earnings for unsupervised retail workers in December rose 4% year over year to $19.93, according to the Labor Department. Wages rose 5% year over year to $28.07 for private sector workers who do not hold supervisory roles.

Despite recent layoff announcements at tech and banking giants, the majority of big US employers are like Walmart continues to face a tight labor market for some key job types, including shop workers and truck drivers. About 340,000 of Walmart’s 1.6 million U.S. workers will see their paychecks increased in March in connection with the change, the spokeswoman said.

Wages for low-wage workers have risen since the pandemic for a number of reasons, including widespread labor shortages and rising prices for a range of goods and services. Many employers say they had to raise wages last year to hire and retain restaurant waiters, hotel housekeepers and retail clerks. The Federal Reserve has raised interest rates to tame inflation.

Amazon, which recently announced plans to cut more than 18,000 jobs, mostly in its corporate ranks, said in September it was raising the average starting salary for its frontline warehouse workers from $18 an hour to more than $19 would increase. Target has raised starting wages for its hourly workers to $15 in 2020. Costco has raised its US minimum wage to $17 an hour in 2021, and the chain’s hourly minimum currently stands at $17.50, CFO Richard Galanti said Tuesday.

Walmart has a more rural and Southeastern store base compared to some of its U.S. competitors, including Target and Costco. That means more of its 4,600 stores and warehouses are in states like Texas, Mississippi and Georgia that haven’t introduced higher minimum wages in recent years.

The company’s move could result in wage pressures in low-income areas where it is a major employer. Some economists have noted that Walmart’s market power is a key determinant of wage levels in local economies where Walmart has a large presence, particularly at other retailers and grocery stores.

Walmart’s announcement on Tuesday includes a mix of regular annual raises the company is giving to hourly workers, as well as “target investments in starting prices for thousands of stores,” the company said in a statement.

Changes also include new higher-paying roles at its autocare centers, expanded benefits as part of its subsidized college degree program for employees, and the expansion of a program that trains existing employees to be Walmart truck drivers.

Write to Sarah Nassauer at [email protected]

Corrections & Enhancements
The name of Costco Wholesale Corp. was incorrectly referred to as Costco Warehouse Corp. in a previous version of this article. specified. (January 24) Also, the federal minimum wage is $7.25 an hour. A previous version of this article incorrectly stated that it should rise to $9.50 on July 1st. (January 24) Target also increased starting wages for its hourly workers to $15 in 2020. A previous version of this article erroneously stated the company raised starting wages for these workers over the past year. (January 24)