Retail giant Walmart to raise wages for US staff

John Biers
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Walmart has withdrawn two Halloween costumes referencing Arabs and Israelis in the wake of an outcry from civil-liberties groups

Walmart has withdrawn two Halloween costumes referencing Arabs and Israelis in the wake of an outcry from civil-liberties groups (AFP Photo/Scott Olson)

New York (AFP) - Global retail giant Walmart, which has faced criticism over low salaries and skimpy benefits for years, announced Thursday it would raise wages for 500,000 workers in the US.

The largest private single employer in the United States said salaries for about 40 percent of its US staff would be lifted to at least $9 per hour in April, $1.75 above the federal minimum wage. By February 1, 2016, US staff will be paid at least $10 an hour.

The move follows mounting criticism by labor unions and other groups that the company's low wages have locked workers into poverty and pressured some of them to seek public assistance to make ends meet.

President Barack Obama has also made the issue of low pay and a growing income gap across the country a key focus of his economic policy.

On Thursday, the White House amplified its call for the federal minimum wage, a base level for the whole country, to be raised to $10.10 per hour. The minimum was last raised in 2009.

"Good to see Walmart raising wages for about 500,000 employees. Now it's time for Congress to #RaiseTheWage," the White House tweeted.

In a video address to employees, Wal-Mart Stores chief executive Doug McMillon acknowledged that "sometimes we don't get it all right."

"As a team, we really wanted to demonstrate this year that we really care about you as associates and appreciate the work you do every day," said McMillon.

Last year a coalition of progressive and pro-labor groups, Americans for Tax Fairness, issued a report claiming that the government provides $6.2 billion a year in poverty-based assistance to Walmart workers because of their low wages.

The group also attacked the tax benefits earned by the family which controls Walmart, the Waltons, called the world's wealthiest family by Forbes with a $152 billion fortune.


- States enacting wage hikes -

The move came as a number of states have increased their minimum wages in recent years to address what economists say is a growing gap between what the average and wealthiest American households earn.

As of January, 29 states plus the District of Columbia have minimum wages above the federal standard, according to the National Conference of State Legislature.

Emily Wells, a member of OUR Walmart, an labor union-backed employee group that seeks higher wages, said she was "proud" their campaign had yielded a raise, but that more is needed.

"Especially without a guarantee of getting regular hours, this announcement still falls short of what American workers need to support our families," said Wells, who works in Florida.

"With $16 billion in profits and $150 billion in wealth for the owners, Walmart can afford to provide the good jobs that Americans need -– and that means $15 an hour, full-time, consistent hours and respect for our hard work."

But the National Retail Federation, a leading trade group, said Walmart's decision reflected the power of the marketplace as it took a swipe at policies such as government mandates to hike wages.

"Like many other retailers, Walmart made its decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate," it said..

"Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery."

McMillon told the network CNBC that Walmart would stay out of the political debate on the minimum wage.

Walmart said increased spending on wages and on a new program to promote employee education would weigh on future profits. The new program will shave 20 cents per share from earnings in fiscal 2016.

Walmart projected fiscal 2015 earnings of $4.70-$5.05 a share compared with the $5.19 expected by analysts.

Morgan Stanley said the company's outlook was disappointing, but that the wage announcement was positive "for how it should enhance morale, attract and retain labor, and lead to better customer engagement."

The wage hike could also prompt competitors to follow suit, which could give lower-income Americans more spending power, eventually feeding back into Walmart results, Morgan Stanley added.

In afternoon Thursday Walmart shares fell 2.9 percent to $83.77.