On Thursday, Wal-Mart declared a pay raise of at least $9 per hour for its workers. This company is the largest employer of labour in the private sector of the United States and has in the past fallen short of the expectation with regards to its unfair labour performances. Even if it has so many workers, the company pay rate has been very low before now.

 

Wal-Mart announced that by April this year all its employees based in the United States will be earning a minimum wage of $9 per hour, and in February 2016, they will receive a minimum wage of $10 per hour. This news comes as a much expected change for the giant retail company, in the midst of the prolonged criticism that lingered on its much use of part time workers and low pay rate. But some say that this raise is not good enough, insisting that it should be raised higher than $15 per hour.

 

Some analyst thinks that the pay raise by Wal-Mart is a good signal indicating that the employment market is becoming better with a hope of a general raise in wages. This is obvious with the recent decrease to the unemployment rate in the United States to 5.7% from the previous rate of 9.8%. Wal-Mart has been forced to raise pay so as not to loose workers, since its competitors are paying better.

 

Certainly the employment market in the United States is becoming better as employees with low income are now receiving  a raise, using the Wal-Mart scenario as a typical example.

 

Ann Hodges, a labour expert from the University of Richmond said “We’re finally going to see a wage creep, and Wal-Mart is trying to get out in front, they’re thinking: We’re probably going to do this anyway”. From the quoted statement of the labour analyst above, one can see that employment pay raise in the United State is inevitable.

 

Wal-Mart’s pay increase will be implemented on its workers that have been earning lower than $9 per hour,  and this equates to 40 percent of its work force. But the ratio of increase for these workers are not really much, since the company said that it had paid its workers using the minimum wage scheme of the federal government – that is the $7.25 per hour rate. So, the difference between $7.25 and $9 is not high, but is better. Presently, the average payment of full time employees at Wal-Mart is $12.85 per hour, while part time employees get $9.48 per hour.

Wal-Mart’s Pay-raise is Lagging

 

Wal-Mart is coming behind its competitors in the retail industry whose employees earn $9 or more before now. Ikea and Gap have moved faster that Wal-Mart with employee wage increment, to draw more workers hence reduce turnover. Others like Costco, pay their workers even higher than the aforementioned with compensations, each worker here receives at lest $20 per hour.

 

If Wal-Mart that has lagged behind with regards to workers payment could move for a pay raise now, then other firms like it would also emulate this. We are expecting a pay increase for other retailing companies. Presently, Home Depot’s pay is between $7.90 and $11.16 per hour, Kroger’s pay rate is $7.26 to $11.99, and the pay rate of Target is $7.42 to $10.09 all these are according to PayScale. It is therefore evident that some percentage of workers in the aforementioned firms earn lower than $9 per hour, and should take a cue from Wal-Mart’s Workers pay raise.

 

Oliver Chan who is a Retail Analyst working with Cowen in New York, states that employee pay raise is inevitable for other Retailing Company. This can not be avoided by firms anymore because most states in the United States have increased their minimum wage higher than that of the federal government.  The minimum wage of the federal government requires a much needed review as it has remained unaltered since 2007, this is why about 29 states in the United States went ahead to increase its minimum wage.

 

Michael Shay, the National Retail Federation’s chief executive applauded the pay increase decision made by Wal-Mart and advised legislators to create policies that would not hinder employment creation and recovery of the economy.

Is Wal-Mart’s Pay Increase not enough?

 

The National Employment Law Project’s director attributed the pay increase made by Wal-Mart to the constant protest and pressure mounted on the firm by its employees, different labour group and also by some politicians. Wal-Mart’s case has always been a topic in the news with several demonstrations carried for an increase in pay in front of the firm’s stores.

 

Finally, the company has been forced to take a positive action towards pay increment, but some experts say that the increase is not enough. One of those advocating for more increase is the executive director of the National Employment Law Project, Christine Owens. She said – “When compared to the $16 billion in profit that the company rakes in annually, Wal-Mart’s promise of $10 an hour – which even for a full time worker is not enough to keep a family of four out of poverty – is meager”.

 

Apart from Christine Owens, other leaders of labour activist groups are still campaigning for more increase to the minimum pay received by Wal-Mart’s employees. However, Wal-Mart has stated that with the pay increase, it will provide better job scheduling, and training for employees. Greg Foran, The chief executive of Wal-Mart made these announcements.

 

Image:”Walmart store exterior 5266815680” by Walmart Corporate from Bentonville, USA – Walmart store exterior. Licenced under CC BY 2.0 via Wikimedia Commons.