By Paul Ziobro And Michael Calia
Wal-Mart Stores Inc. plans to boost the pay of its U.S.
employees to at least $9 an hour by April, a raise that will top
the federal minimum wage by 24% and take a bite out of the
company's profit this year.
The company said it would raise the pay for those employees by
another dollar an hour by next year. In all, the moves affect some
500,000 full-time and part time employees at Wal-Marts and Sam's
Clubs, about a third of the company's 1.4 million U.S. total.
The move by the world's largest retailer comes as the vast gulf
between the richest Americans and the rest of the country has
become a key political issue for both parties as another
presidential election cycle looms. Wal-Mart, with its low wages and
scheduling policies that critics say make it hard for part-time
employees to predict their hours, has long been a flash point for
that debate.
Chief Executive Doug McMillon has for months said Wal-Mart would
soon detach itself from the official minimum wage, joining
retailers like Gap Inc. and Costco Wholesale Corp. that have
committed to paying workers more than federal law requires. Aetna
Inc. also said last month that it would boost the wages of its
lowest-paid workers by as much as a third, to $16 an hour, to draw
better prospects and reduce turnover.
Wal-Mart's action will raise average full-time worker wages to
$13 an hour, up from nearly $12 an hour, while average part-time
workers will be paid $10 an hour. It wasn't immediately clear what
that would mean for the other key variable in the income
equation--hours--though the company said scheduling would become
more predictable.
The gains also may not be enough to satisfy critics. A group
including some Wal-Mart workers had been pushing the retailer to
institute a $15 minimum wage.
While Congress hasn't voted to boost the federal pay floor since
raising it to $7.25 in 2009, many states and cities have set
minimum wages well above the federal level. Seven states, including
California and Massachusetts, already mandate that all employers
pay workers at least $9 an hour. An eighth state, Minnesota,
reaches $9 in August.
With states and companies raising pay floors, relatively few
workers earn the federal minimum wage or less per hour, according
to the Labor Department. In 2013, 3.3 million workers earned the
federal minimum, or 4.3% of hourly wage earners. Of those workers,
14% worked in retail jobs. Nearly half worked in food service.
Low-wage employers, broadly, have seen wage pressures increase
in the past year as the unemployment rate has fallen.
Mike Bufano, senior vice president for planning at Panera Bread
Co., told investors this month that the company is paying "higher
wages across-the-board" adding there is "war for talent" in the
sector.
The wage announcement came as Wal-Mart reported a relatively
strong holiday season, with sales at its core U.S. business up
1.5%, excluding newly opened or closed stores, led primarily by
getting more shoppers to come into stores. Customer traffic
increased 1.4%, the first quarterly increase in more than two
years, helped by lower gasoline prices, Mr. McMillon said.
But Wal-Mart said the investment in higher wages and better
training will cost the company. It projected earnings of $4.70 to
$5.05 a share. The stronger dollar, if it remains at current rates,
would cut another 10 cents a share from the bottom line, putting
earnings below the recently ended fiscal year.
The company's shares fell 2.9% in afternoon trading.
Wal-Mart also warned that its net sales could take a $10 billion
hit if foreign-exchange rates remain where they are. The company
said it now expects sales growth of 1% to 2%, down from its October
guidance of 2% to 4% growth.
For the quarter ended Jan. 31, Wal-Mart reported earnings of
$4.97 billion, up from $4.43 billion a year earlier. Revenue rose
1.4% to $131.6 billion.
The retailer also raised its quarterly dividend to 49 cents a
share, an increase of a penny. The boost brings the dividend yield
to 2.3%, compared with the 2.7% at rival Target Corp.
Eric Morath contributed to this article.
Write to Paul Ziobro at Paul.Ziobro@wsj.com and Michael Calia at
michael.calia@wsj.com
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