Walmart Stores Inc.’s pay raises show the world’s largest retailer is taking steps to retain its workers as a strengthening U.S. labor market creates more options for job seekers.
The Bentonville, Arkansas-based retailer said it will increase pay for 500,000 of its U.S. hourly workers to at least $9 an hour by April and then to $10. The move is part of a multi-year commitment to lift both base and average wages for its U.S. workforce of 1.3 million and, through company-paid training, their skills.
“This is evidence of a tightening labor market,” said David Cooper, senior analyst with the Economic Policy Institute in Washington.
Walmart’s move comes as the nation’s jobless rate has dropped a full percentage point in the past year, to 5.7 percent in January, close to the level that Federal Reserve policy makers consider full employment.
Job openings increased to more than 5 million in December from less than 4 million at the beginning of 2014. More employment choices and fewer people out of work means employers are under pressure to improve wages and benefits or face higher turnover as people look elsewhere for better jobs.
Walmart’s turnover is among the highest for U.S. retailers, said Burt Flickinger, managing director at Strategic Resource Group in New York.
“With higher turnover comes higher costs of hiring, training and lower productivity per person,” he said.
The retailer is doing more than responding to a tighter labor market, said Jared Bernstein, the former chief economist for Vice President Joe Biden and a senior fellow with the liberal Center on Budget and Policy Priorities in Washington.
“It looks like a company seeking to improve the quality of its work force,” he said.