As Walmart Gives Raises, Other Employers May Have to Go Above Minimum Wage

As Walmart Gives Raises, Other Employers May Have to Go Above Minimum Wage

FEB. 19, 2015
Neil Irwin

Walmart is the biggest private employer in America, with 1.3 million United States workers. And many of them will soon see a raise, in the latest snippet of corporate news that suggests a firmer job market is starting to enable workers to successfully demand higher pay.

The company said it would pay even its lowest-level workers at least $9 an hour starting this spring, comfortably above the $7.25 federal minimum wage, and push that to $10 in 2016.

The company also said it would strengthen a “department manager” role, giving it a minimum wage of $13 per hour this year and $15 next, thus offering low-wage hourly workers a clearer path to advancement. Including similar bumps at Walmart-owned Sam’s Clubs, the company expects 500,000 workers to receive a raise at a cost of $1 billion a year, executives said in a conference call with reporters.

RELATED COVERAGE

• http://static01.nyt.com/images/2015/...mbStandard.jpg
  
  
  Walmart Says It Will Raise Wage to at Least $9
• FEB. 19, 2015
  
  

Walmart is surely hoping to get plenty of good press for its decision to offer raises, but it’s worth examining the decision less based on whether they deserve applause on some moral grounds and more based on the economic forces that led them to act. Indeed, the best possible news would be if Walmart’s executives made this decision not out of a desire for good press or for a squishy sense of do-gooderism, but because coldhearted business strategy compelled it.

http://static01.nyt.com/images/2015/...ticleLarge.jpg

In November 2013, Pedro Taverna took part in a protest for better wages outside a Walmart in Los Angeles. CreditLucy Nicholson/Reuters

A first reaction to Thursday's news may be simply: What took so long?

This has been a challenging five-year period in which, despite steady economic growth, average hourly wages for nonmanagerial workers have risen around 2 percent a year, barely more than inflation. There is no doubt that working on the floor of a Walmart store is still going to be a hard job at a pay level that makes it hard to get by. But these are enormous percentage gains, and the decision by Walmart comes on the heels of a similar announcement by the health insurer Aetna and survey data that also point to a tighter labor market and higher raises in the future.

Walmart’s Earnings Per Employee Have Risen Sharply

The largest private employer in the United States has recorded strong gains in its net income per employee since the recession.
Walmart net income per employee, by fiscal year

$7,500

7,000

6,500

6,000

5,500

$7,283

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

http://int.nyt.com/chartmaker/2015/0...oard-540px.png




Shaded area indicates period of U.S. recession
Source: Bloomberg

Back in its 2007 fiscal year, before the recession, Walmart reported $183,500 in revenue per employee and $5,938 in profit. Not bad, but by 2014 those numbers had risen 18 percent and 22 percent. The company’s sales and profits rose nicely in that time while the company kept a lid on its payroll.

Gains went to Walmart shareholders, not Walmart workers.

So what has changed? The simple answer is that the world for employers is very different with a 5.7 percent unemployment rate (the January level) than it was five years ago, at 9.8 percent. Finding qualified workers is harder for employers now than it was then, and their workers are at risk of jumping ship if they don’t receive pay increases or other improvements.

Apart from pay, Walmart executives said in their conference call with reporters that they were revising their employee scheduling policies so that workers could have more predictability in their work schedules and more easily get time off when they needed it, such as for a doctor’s appointment.

The giant question now is not whether there will be some meaningful wage gains in 2015; beyond the anecdotal evidence from Walmart and Aetna, the collapse in oil prices means even modest pay increases will translate into quite large inflation-adjusted raises. The question is whether wage gains will be strong enough to create a virtuous cycle in which rising pay for the workers at the bottom three-quarters of the income scale, who are most likely to spend the money and get it circulating through the economy, will spur more investment and hiring.
To the degree their logic was, “We think we’re going to need to raise wages this much in the next couple of years anyway to retain good workers and maximize profitability, so we may as well get ahead of the curve and get a public relations bump out of it and announce the plans in a big splashy way,” that would be the best news for American workers. Because that would imply that it won't just be Walmart workers getting a raise in 2015.

http://www.nytimes.com/2015/02/20/up...imum-wage.html

Quote:

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Originally Posted by JohnDoe2

As Walmart Gives Raises, Other Employers May Have to Go Above Minimum Wage

FEB. 19, 2015
Neil Irwin

Walmart is the biggest private employer in America, with 1.3 million United States workers. And many of them will soon see a raise, in the latest snippet of corporate news that suggests a firmer job market is starting to enable workers to successfully demand higher pay.

The company said it would pay even its lowest-level workers at least $9 an hour starting this spring, comfortably above the $7.25 federal minimum wage, and push that to $10 in 2016.

The company also said it would strengthen a “department manager” role, giving it a minimum wage of $13 per hour this year and $15 next, thus offering low-wage hourly workers a clearer path to advancement. Including similar bumps at Walmart-owned Sam’s Clubs, the company expects 500,000 workers to receive a raise at a cost of $1 billion a year, executives said in a conference call with reporters.

RELATED COVERAGE

• http://static01.nyt.com/images/2015/...mbStandard.jpg
  
  
  Walmart Says It Will Raise Wage to at Least $9
• FEB. 19, 2015
  
  

Walmart is surely hoping to get plenty of good press for its decision to offer raises, but it’s worth examining the decision less based on whether they deserve applause on some moral grounds and more based on the economic forces that led them to act. Indeed, the best possible news would be if Walmart’s executives made this decision not out of a desire for good press or for a squishy sense of do-gooderism, but because coldhearted business strategy compelled it.

http://static01.nyt.com/images/2015/...ticleLarge.jpg

In November 2013, Pedro Taverna took part in a protest for better wages outside a Walmart in Los Angeles. CreditLucy Nicholson/Reuters

A first reaction to Thursday's news may be simply: What took so long?

This has been a challenging five-year period in which, despite steady economic growth, average hourly wages for nonmanagerial workers have risen around 2 percent a year, barely more than inflation. There is no doubt that working on the floor of a Walmart store is still going to be a hard job at a pay level that makes it hard to get by. But these are enormous percentage gains, and the decision by Walmart comes on the heels of a similar announcement by the health insurer Aetna and survey data that also point to a tighter labor market and higher raises in the future.

Walmart’s Earnings Per Employee Have Risen Sharply

The largest private employer in the United States has recorded strong gains in its net income per employee since the recession.
Walmart net income per employee, by fiscal year

$7,500

7,000

6,500

6,000

5,500

$7,283

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

http://int.nyt.com/chartmaker/2015/0...oard-540px.png




Shaded area indicates period of U.S. recession
Source: Bloomberg

Back in its 2007 fiscal year, before the recession, Walmart reported $183,500 in revenue per employee and $5,938 in profit. Not bad, but by 2014 those numbers had risen 18 percent and 22 percent. The company’s sales and profits rose nicely in that time while the company kept a lid on its payroll.

Gains went to Walmart shareholders, not Walmart workers.

So what has changed? The simple answer is that the world for employers is very different with a 5.7 percent unemployment rate (the January level) than it was five years ago, at 9.8 percent. Finding qualified workers is harder for employers now than it was then, and their workers are at risk of jumping ship if they don’t receive pay increases or other improvements.

Apart from pay, Walmart executives said in their conference call with reporters that they were revising their employee scheduling policies so that workers could have more predictability in their work schedules and more easily get time off when they needed it, such as for a doctor’s appointment.

The giant question now is not whether there will be some meaningful wage gains in 2015; beyond the anecdotal evidence from Walmart and Aetna, the collapse in oil prices means even modest pay increases will translate into quite large inflation-adjusted raises. The question is whether wage gains will be strong enough to create a virtuous cycle in which rising pay for the workers at the bottom three-quarters of the income scale, who are most likely to spend the money and get it circulating through the economy, will spur more investment and hiring.
To the degree their logic was, “We think we’re going to need to raise wages this much in the next couple of years anyway to retain good workers and maximize profitability, so we may as well get ahead of the curve and get a public relations bump out of it and announce the plans in a big splashy way,” that would be the best news for American workers. Because that would imply that it won't just be Walmart workers getting a raise in 2015.

http://www.nytimes.com/2015/02/20/up...imum-wage.html

---

first of all be happy you have a job some don't have work

Wal-Mart wage hike seen pressuring Target, fast-food

BY NATHAN LAYNE
Thu Feb 19, 2015 8:40pm EST

Feb 19 (Reuters) - Wal-Mart Stores Inc's wage hike will likely trigger a rethink on pay across the retail and fast-food sectors, with Target Corp one of the low-wage employers facing pressure to follow suit and pay workers more.

Wal-Mart announced on Thursday it would lift its minimum U.S. wage to $9 an hour this year and $10 in 2016, raising the ante in a tightening labor market where low-skilled workers easily move between retailers and fast-food chains.

Labor and shareholder activists will likely use the news to ratchet up pressure on companies which have so far faced less scrutiny than Wal-Mart, the largest private U.S. employer with a workforce of 1.3 million.

"This is the largest retailer out there so I think others are going to have to follow," said Brian Yarbrough, analyst at Edward Jones, naming Target and Staples Inc among other national retailers that may look to revise their pay scales. "All the restaurants are going to be under pressure as well."

When Gap Inc a year ago set its minimum wage at $9 an hour and pledged to go to $10 in 2015, many workers at Wal-Mart sought to switch and secure employment at the apparel retailer, according to Burt Flickinger, managing director of Strategic Resource Group, a retail industry consultancy.

Now, Wal-Mart's move should help it reduce turnover and will likely put the most direct pressure on Target, given that their pay scales for entry-level positions are generally close and there is broad overlap in product lines.

"It's absolutely Target," Flickinger said when asked what rival would likely need to take action to retain staff.

Target spokeswoman Molly Snyder said the company was "committed to offering market competitive wages that can help attract and retain great talent." She said Target pays above the federal minimum wage of $7.25 at all of its stores, but does not disclose its average rate.

Wal-Mart said the hikes would lift the average hourly wage this year for full-time employees to $13 from $12.85, while raising the average for part-time staff to $10 from $9.48. Those rates could go higher in 2016.

Data from employer review site Glassdoor based on at least 75 responses shows that Target, Wal-Mart and Staples are roughly paying the same hourly rate, with cashiers and sales associates making around $9 an hour. A cashier at McDonald's Corp, by comparison, was averaging $8.44, the data shows.

Staples and McDonald's did not immediately respond to requests for comment.

It's not just wages. Wal-Mart also said it planned to make the scheduling of hours more predictable, taking a step towards addressing an issue that has long been a source of worker frustration.

Labor groups and institutional investors have long targeted Wal-Mart on wages and now appear set to widen their scope.

David Schilling, senior program director for human rights at the Interfaith Center on Corporate Responsibility, said investors would use the Wal-Mart wage hike as leverage when negotiating changes at other firms.

"It's not just the retail sector. It could be fast food, restaurant workers," said Schilling. When it's "a big player like Wal-Mart the ripples go forward."

http://www.reuters.com/article/2015/...0VT3DG20150220

2/26/2015 @ 10:57AM 664 views

TJX Boosts Pay For Hourly Workers: Is 2015 The Year of The Retail Store Employee?

On Wednesday February 25, TJX, parent company of the TJ Maxx, Marshalls and Home Goods retail chains announced it is joining a growing list of retailers increasing base pay for hourly employees to $9 an hour. The company follows Walmart, IKEA Gap GPS -0.12% and others in moving beyond the federally mandated minimum wage.

Walmart has promised an additional $1 per hour base pay raise to follow over the course of the coming year.

This is no small thing and it’s the tip of a very large iceberg.

The retail business model has been built on the model of a transient, low-paid, mostly part-time in-store work force for the past hundred years.

That model is changing irrevocably, driven by the growing threat of online retailers like Amazon.com AMZN -0.08% who are forcing retailers to provide better service in stores, worker advocacy groups lobbying for change, and public sentiment from adverse publicity. And so we have come to 2015: the Year of the Retail Store Employee.

Because it is so frequently cited in the media, I’ve used Walmart as the “poster child” for these issues, but there’s no doubt other retailers also feel the pain. On the flip side, retailers like Home Depot HD -0.83% and Best Buy experienced a “positive pop” when they improved the lot of their in-store employees.

First, let’s take a look at the threat from online retailers. Overall, according to the American Consumer Satisfaction Index (ACSI) the retail trade sector trails many other sectors, with an overall satisfaction index of 76.8 (down 1.4% from 2013). The eCommerce industry is rated much higher, at 81.7, and the index actually rose 4.6% over 2013.

According to consultancy PwC’s annual global consumer survey, 52% of respondents cited Amazon.com as one of their three favorite retailers, vs. Walmart, cited by 41% of respondents. Certainly Amazon has enjoyed far greater revenue growth that the Arkansas behemoth over the past several years. Walmart has trimmed expenses and in-store payroll to get an acceptable bottom line, but the lack of sales growth is hard to ignore.

With almost anything she wants available at a click of the mouse or the swipe of a finger on a tablet screen, today’s shopper is running out of patience with store-based retailers.

She comes into stores knowing more about the products she wants to buy than the associate expected to help her, and low employee morale at stores like Walmart is just another disincentive to buy there.

Store-based retailers MUST create incentives for store employees to engage with both their customers and complete their non-revenue generating tasks quickly and efficiently. The baseline for that employee engagement is a living wage.

Next, let’s look at worker advocacy groups. Bloggers like me receive almost daily emails from OUR Walmart (Organization United for Respect at Walmart). The group has organized annual Black Friday strikes and highlights the stark choices Walmart workers must make because their wages are so low. A recent such email reported the following:

“Anthony Rodriguez, a Walmart worker from California, is forced to choose between diapers and groceries on weeks when he is scheduled for as few as 18 hours. Kelly Sallee, who works at a Walmart in Dayton, Ohio, is putting off plans for a wedding and a family because of the low pay and schedules that include as few as 21 hours a week. Both are also battling debt.”

The data raised in these emails have found their way onto the Op-ed pages. The New York Times Editorial Board suggested,

“A hugely profitable corporation like Walmart can readily afford to do better than those measly increases. But it is very unlikely to do that voluntarily, without governmental action.”

The last thing retailers want is government mandated pay increases. And so we will see continued pressure for higher in-store employee pay.

And that brings us to the last factor driving change: public sentiment from adverse publicity. Gradually the public is being made aware that because many of these part-time workers are below the poverty level, they are also on public assistance programs. So while prices appear to be low, taxpayers ask themselves “Why am I subsidizing mammoth corporations?

They seem to pay lower taxes than I do, but I’m helping support the people who work for them?”

Public sentiment translates into lack of store visits. So, for example, while Wall Street may excoriate companies like Costco for paying far higher wages than Walmart but consumers take notice. As reported in the Huffington Post:

“The company’s starting pay is $11.50 per hour, and the average employee wage is $21 per hour, not including overtime. Most other big box retailers start their employees at minimum wage.”

Many people shop at Costco who would not even consider stepping through Walmart’s doors. On the one hand, it could be argued that the customer demographics of the two chains are very different. You don’t see a lot of Mercedes in Walmart’s parking lot. But on the other hand, the retailer needs to find revenue growth from new customers.

The last few years have taught Walmart and other low-price retailers that small shifts in the payroll tax or gas prices have dramatic impacts on their low-income customer base. Higher income customers are generally less volatile. But the middle class generally prefers to “feel good” about where they shop.

Anyone who has shopped at a Trader Joe’s knows how cheerful and helpful its employees are. The average crew member there earns $13.20 an hour, with frequent opportunities for raises.

The employees feel empowered, knowledgeable, and appreciated.

Retailers know this. In a recent benchmark survey conducted by my company, RSR Research, 47% of respondents cited “more personalized attention from employees” as a top-three opportunity for improving the in-store experience to drive their another top-three opportunity, “Focus on a more convenient customer experience” (cited by 51% of respondents).

And so we are left with only one conclusion: To return to a period of growth in terrestrial retailing, retailers will find a way to pay their in-store associates more money, and shift a model that has existed for more than a century. None of the forces cited above are going away any time soon, and in fact, public pressure may accelerate. 2015 is the year of the in-store employee. And once again, retail will never be the same.

http://www.forbes.com/sites/paularos...tore-employee/

http://www.alipac.us/f19/mcdonald%92...orkers-318594/