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Walmart Drives Trend of Retail Minimum Wage Increases
Authored By: HR Performance on 2/11/2016

More than 1 million U.S. workers will be getting a raise this month when Walmart hikes its pay scale for store employees. The hike in wages are part of a series of increases the retailer announced last year that will get all but its newest hires to at least $10 per hour.

Walmart says that the average pay for hourly employees will eventually hit $13.38 for full-timers and $10.58 for part-timers. For some employees, the raises will come a few months sooner than expected. Rather than bump pay when workers hit their anniversaries as planned, the company recently decided to instead hike all store employees' pay on the same day, Feb. 20. It also will give a one-time 2 percent raise to employees who'd already hit the maximum pay for their positions, according to Walmart spokesman Kory Lundberg.

Along with the these massive wage increases, Walmart is also implementing new Short-term Disability Plan and simplified paid time off (PTO) programs. The combined changes will expand support for associates dealing with extended health issues and provide associates greater control over their paid time away from work, according to the retail giant's news site.

The Short Term Disability Basic plan is available at no cost to full-time hourly associates. Effective Jan. 1, 2016, the plan offers more financial protection to workers who need to be away from work for an extended period of time due to their own medical needs such as an illness, injury or having a baby. The basic plan will pay 50 percent of a worker’s average weekly wage, up to $200, for up to 26 weeks. Walmart is also offering a Short Term Disability Enhanced plan, which costs less than the company’s prior voluntary plan and provides more coverage. Associates would receive up to 60 percent of their average weekly wage with no weekly maximum for up to 26 weeks.

The new PTO plan will take effect March 5, 2016 for Walmart and Sam's Club employees, and will streamline paid vacation, sick time, personal time and holiday time into one category.  And the one-day wait to use sick time will be eliminated, as promised. When the plan rolls out in March, both full- and part-time associates will earn PTO based on tenure and hours worked. The plan includes:

  • No waiting. PTO is available to use as soon as it’s earned and can be used for almost any reason.
  • Full-time hourly associates can carry over up to 80 hours (48 hours for part time) of PTO from year to year.
  • Any unused hours at the end of the year above the 80 hour and 48 hour limits will automatically be paid to hourly associates in the first paycheck every February.
  • Associates will also keep any existing and accrued sick and personal time. These balances will be kept separate, to be used for certain circumstances once all available PTO is used. 

Last year Ikea increased their average minimum wage to $10.76 per hour, a 17% increase and well above the federal minimum wage of $7.25 per hour. The increase was a market-based adjustment from $8.69 per hour to $13.22 per hour depending on the cost of living in the city in which the store is located.  Ikea estimates that about half of its United States benefited by the increase which was based on the MIT Living Wage Calculator.

Rob Olson, Ikea’s acting president for the United States and its chief financial officer was quoted as saying, “We are of course investing in our co-workers.  We believe they will invest in our customers, and they will invest in Ikea’s stores.  We believe that it will be a win-win-win for our co-workers, our customers and our stores.”  Ikea’s goal is to promote a “better everyday life” for their people.

Gap is another retailer that also increased its minimum wage to $10 per hour early in 2015 after setting its minimum wage at $9 per hour the previous year.  Their new wage policy will benefit more than two-thirds of its 90,000 U.S. employees.  Gap reported more than a 10 percent increase in their applications for employment after they announced the increases.

These retailers have a great desire to help their workers, and even though the minimum wage increases are a large investment, it is one they feel will help them reach their organizational goals and have a positive impact on the bottom line.

Source:  Greenhouse, Steven.  The New York Times.  “Ikea to increase Minimum Hourly Pay.”  Available here.

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