Wal-Mart to raise starting pay

Increase about 6% at a third of stores

August 08, 2006|By BLOOMBERG NEWS

NEW YORK -- Wal-Mart Stores Inc., under fire from critics who say it doesn't pay enough, said it will raise the starting wages an average of 6 percent at almost a third of its U.S. Wal-Mart and Sam's Club stores.

The world's largest retailer said it also will also set a maximum wage for each specific job. The changes won't have a material effect on profit, spokesman John Simley said today. Bentonville, Ark.-based Wal-Mart pays full-time employees an average of $10.11 an hour, compared with $17 at Costco Wholesale Corp., the largest U.S. warehouse-club retailer.

Labor and religious groups have criticized Wal-Mart's wages and benefits, and the company faces legislative attempts to regulate what it pays. Wal-Mart is raising its pay as Congress debates whether to increase the federal minimum wage 41 percent to $7.25 from the current $5.15.

Paul Blank, campaign director of Washington-based Wake-Up Wal-Mart, called the new salary policy "one step forward and two cruel steps backwards." His group is funded by the United Food and Commercial Workers union. Wal-Mart's 3,900 stores in the United States aren't unionized.

Chicago last month passed a living-wage bill a week after a federal judge in Maryland overturned a law that would have required the retailer to spend 8 percent of its payroll on health care. The Chicago law requires workers at stores larger than 90,000 square feet to be paid at least $9.25 an hour plus $1.50 in benefits.

Other cities, including New York, have passed minimum levels for wages or benefits as Wal-Mart seeks to expand into urban areas.

Shares of Wal-Mart fell 5 cents to close at $44.82 on the New York Stock Exchange. They're up 2.6 percent since the Chicago bill was passed.

The increase in starting pay pushes Wal-Mart closer to wages offered by competitors. Including benefits, supermarkets pay about $6 to $10 an hour more than Wal-Mart, said Andy Wolf, managing director at BB&T Capital Markets in Richmond, Va.

"Wal-Mart is helping itself as much as helping employees," said Burt Flickinger, managing director of Strategic Resource Group, a New York consulting firm. "There was disparity versus competing retailers like Costco, like others in the food and drug sector."

An internal survey indicated that 1,200 of the company's stores had to have salary ranges adjusted to remain competitive, Simley said. The changes in the minimum should help with staffing on nights and weekends and reduce turnover, Flickinger said. Simley said the wage ceiling would encourage workers near the top of the range to apply for higher positions.

"It gives us a larger reserve of people to perform the jobs we need done in the stores," Simley said.

Nu Wexler, a spokesman for Wal-Mart Watch, said he was "willing to take them at their word" that the salary cap would encourage promotions. Wal-Mart Watch, a Washington-based organization made up of labor, religious and environmental groups, seeks to get the retailer to boost wages and benefits.

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