Wal-Mart to Increase Wages for Most U.S. Store Workers

Almost everyone who works at a Wal-Mart in the U.S. will get a raise in February, as the country's largest private employer battles chronic turnover and a tighter labor market.

Wal-Mart Stores Inc. said it would increase wages for most of its 1.2 million U.S. store employees on Feb. 20. The company previously announced plans to lift its minimum wage to $10 on that date, and now Wal-Mart says all hourly workers employed in stores as of Dec. 31 will get at least a 2% pay bump.

Wal-Mart is making the change to address concerns raised by some long-time workers, who complained about the more-generous starting wages for new hires. The company is also trying to stem defections and the amount of money it spends to hire and train new staff. Wal-Mart loses hundreds of thousands of store workers each year, a Wal-Mart executive said last October.

Minimum-wage increases took effect in 20 states last year and several of the biggest employers of hourly workers, including McDonald's Corp. and Starbucks Corp., have also lifted their starting pay. Average hourly earnings for retail workers was $14.95 in December, up 3.6% from a year earlier. With the February changes the average full-time Wal-Mart employee will earn $13.38 an hour, the company said.

In April Wal-Mart raised its minimum wage to $9 an hour, sparking complaints from some employees that they made nearly the same as a new hire with less experience, says Judith McKenna, Wal-Mart U.S. chief operating officer. This time Wal-Mart wanted all employees to benefit at once and to clearly communicate the change, she said.

"That doesn't mean that we still won't have compression in the organization," says Ms. McKenna, referring to when rising minimum wages shrink wage differences for more senior employees. Still, last April's experience taught Wal-Mart executives that employees want to know "they will still be ahead of those who come from an entry level position," says Ms. McKenna.

To achieve one day of company-wide raises, Wal-Mart will move the typical 2% annual pay increase to Feb. 20 instead of granting the increase on store workers' date-of-hire anniversary. Employees that have reached a wage cap will get a one-time payment equal to 2% of salary.

Store employees were told of the change Wednesday morning.

In October company executives said wage increases would cost about $2.7 billion over fiscal year 2016 and 2017, driving down next fiscal year's profit by as much as 12% and depressing the company's share price. The 2% wage increase is included in that figure, said Ms. McKenna.

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

January 20, 2016 14:15 ET (19:15 GMT)

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