On Thursday, Walmart announced several changes to its compensation and benefits structure—the most noticeable being its hourly wage increase. Walmart states that, by April 2015, its entry-level wage will start at $9 an hour, and it will go up to $10 an hour by early 2016.
Other new measures include additional training and opportunities for internal promotion, which Walmart CEO Doug McMillon states will create clearer paths to better jobs and higher pay.
These changes are significant—Walmart is the largest private employer in the country, and this will increase wages for 500,000 of its employees. The cost to Walmart over the next year is projected at one billion dollars, but this number is actually small considering the company’s almost $500 billion in annual revenue.
Walmart’s announcement has already created quite the media frenzy. And some—noting that it is not altruism behind these changes—are already questioning Walmart’s motives. Walmart is a business, after all, so there is a bottom line. Is the goal to get out ahead of the pressure from pro-labor organizations or the negative public sentiment that that has plagued Walmart for years? Since several states’ minimum wages are already at $9 an hour, and a federal minimum wage increase from the current $7.25 an hour seems inevitable, it makes sense for Walmart to up its pay on its own terms.
A federal minimum wage increase may not come via the current Republican Congress, but the trend in that direction has been slow and steady. For example, President Obama, via a February 2014 Executive Order, mandated that federal contractors pay at least $10.10 an hour, and as of January 2015, 29 states and the District of Columbia have raised the minimum wage above that of the federal government.
Walmart’s wage increase is seen by some as a natural response to the improving economy and shrinking unemployment rate. More marketplace stability means that employees can demand more from their current employer, or move on and find something better. Walmart’s wage and benefit changes increase workplace stability, which has numerous identifiable benefits, including lower turnover and better-trained and harder-working employees.
Regardless of the reasons behind Walmart’s announced changes, given the financial ease by which Walmart can implement them, there seems to be little to no downside. Of course, there are those who claim that Walmart is not doing enough—that this means that most of its entry-level employees are still going to be earning less than the federal poverty line. While there is no denying that Walmart is capable of doing more, the wage increase and additional training and advancement opportunities are positive steps for both Walmart and its workforce.