Walmart, the nation’s largest private employer, is significantly raising its starting wages for store workers, as it battles to recruit and retain workers in a tight retail labor market.
On Tuesday, the retail giant said in a memo to employees that it was increasing its minimum wages for store workers to a range of $14 to $19 an hour, up from $12 to $18 an hour.
In the memo, Walmart’s chief executive of U.S. operations, John Furner, said the increase was meant “to ensure we have attractive pay in the markets we operate.” The move would immediately affect about 340,000 of the company’s 1.3 million frontline hourly workers in stores across the United States.
For years, Walmart has been under pressure from unions, policymakers and activists to raise its wages for workers in its stores. The raises announced Tuesday would increase the average wage across Walmart stores to roughly $17.50 an hour from about $17, though the company’s average wage still trails some competitors like Costco.
“We want to make sure we attract the best associates,” a Walmart spokesperson, Anne Hatfield, said in an interview.
The raises, which will take affect in March, come amid still persistently high inflation, which has been particularly difficult to navigate for low-wage workers whose paychecks are being stretched by the costs of food, fuel and other basic necessities.
The move by Walmart is also a curiously optimistic sign regarding the broader economy: One of the nation’s largest companies is taking steps to retain workers, even as other large employers have been announcing layoffs.
Mark Zandi, the chief economist at Moody’s Analytics, said he was surprised that Walmart had raised wages “so significantly” given the risks of a recession.
“It suggests that Walmart doesn’t think the economy will suffer a recession anytime soon, or that if it does, it will be a short-lived and modest downturn,” Mr. Zandi said in an email.
The move may also reflect the longer-term challenges that retailers face in retaining workers as baby boomers age out of the work force and the labor pool shrinks, he said.
Even though the raises will ease the inflationary strain on Walmart workers, they may inadvertently prolong the problem broadly by boosting wages across other sectors of the economy.
“Walmart’s move to hike their minimum wage may also complicate the Fed’s efforts to quell wage pressures and thus inflation,” Mr. Zandi said, “as the decision may impact wage hikes and price increases in other labor-intensive industries such as health care, hospitality and personal services that the Fed is focused on in its fight against inflation.”