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America's Largest Private Employer Is Reducing Starting Pay for New Workers. Here's Why — and What It Means for Retail. Most new hires will now earn the lowest possible hourly wage for their respective store, unlike when they previously had the potential to earn more than other store workers in certain roles.

By Madeline Garfinkle

Key Takeaways

  • The new pay structure only applies to new hires, while current employees in these positions remain unaffected.
  • Walmart's decision comes after a period of wage hikes within the retail industry to attract workers in a competitive job market.
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Walmart, the largest private employer in the U.S., has reduced starting pay for new store employees in roles involving online order fulfillment and stocking shelves, The Wall Street Journal reported. Previously, new hires could make more than other store workers, such as cashiers, in roles that called for tasks like collecting merchandise for online orders. The retailer's new pay structure means that most new hires will earn the lowest possible hourly wage for their respective store, regardless of the role they're hired for.

The new payment structure only applies to new hires, as current employees in these positions are not affected. About 50,000 Walmart workers received wage increases in July, a spokesperson told CNBC.

In an official statement to the outlet, Walmart also added that pay adjustments aim to solidify a more consistent pay structure across various roles in the company.

Related: Walmart Is Shutting Down 9 Locations (So Far) This Year — Is Yours One?

"Consistent starting pay results in consistent staffing and better customer service while also creating new opportunities for associates to gain new skills from experience across the store and lay the groundwork for their career regardless of where they start," the company said.

Walmart's revised pay structure comes after a period of wage hikes in the retail industry as a means to attract workers in a tight market. According to data from the Bureau of Labor Statistics, average compensation for retail workers was $23.11 an hour in 2022, up from pre-pandemic levels of $20.54 in 2019.

Throughout much of 2021 and 2022, major retailers like McDonald's, Target and Chipotle increased their starting pay to reel in employees amid hiring lags.

Related: Costco Raises Wages to Remain 'Extremely Competitive'

However, the market has since cooled. A recent Labor Department report found that the job market shows signs of slowing, with the economy generating 187,000 jobs in August, down from the average monthly gain of 271,000 over the prior 12 months.

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

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