Walmart to Raise Wages for Some Workers After Earnings Miss
After falling short of fourth-quarter earnings, Walmart still plans to increase wages for their employees.
Walmart announced it would raise wages for 425,000 U.S. employees, which amounts to over 25% of its workforce. The big-box retailer will boost their wages to at least $13 an hour, bringing its average hourly wage to over $15 an hour.
Walmart announces plans to raise wages
Walmart is the biggest private employer in the U.S., and it will raise wages for hourly workers who stock shelves and fulfill delivery and curbside pickup orders in stores. The starting rate for those positions will be between $13 and $19 an hour, based on where the store is located and what market it is in. The higher wage goes into effect on Mar. 13.
Although Walmart's average wage will be more than $15 an hour after the increase, its minimum wage will remain at $11 an hour. The retailer still lags behind competitors in wages. Amazon boosted its minimum starting wage to $15 an hour in 2018, and Best Buy and Target raised their minimum wages to $15 in 2020.
The federal minimum wage remains at $7.25 an hour, just as it has since 2009. However, President Joe Biden is trying to bump the minimum wage up to $15 per hour as part of his $1.9 trillion stimulus proposal. Lawmakers could vote on the legislation as early as next week. It would hike the federal minimum wage in stages until it reaches $15 an hour in 2025.
Strong holiday sales
Walmart reported its fourth-quarter earnings this morning, and the numbers came up short of consensus estimates, although the company reported strong holiday sales. Comparable sales from U.S. stores and digital channels operating for at least 12 months increased 8.6% for the quarter that ended on Jan. 29.
That marks an acceleration from the third quarter's 6.4% increase. The fourth-quarter comparable sales were higher than what analysts had been expecting. U.S. online sales soared 69% year over year. Walmart benefited from the pandemic, which caused Americans to shop more online and buy more groceries and cleaning products.
The retailer also received a boost during the fourth quarter because customers had stimulus checks to spend. However, the pandemic also increased Walmart's costs. COVID-related expenses alone reached $1.1 billion during the quarter.
Walmart is part of the Entrepreneur Index, which tracks 60 of the biggest publicly traded companies still managed by their founders or the families of their founders. Sam Walton's family is still very involved in the big-box retailer's day-to-day operations, which is why it made the list. Walmart shares declined by about 6% after this morning's earnings report.