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Starting in April, about 500,000 Wal-Mart employees will get a raise to the new level — $1.75 an hour more than the federal minimum wage. (Bob Chamberlin / Los Angeles Times)

By Jim Puzzanghera, Shan Li and Sarah Parvini
February 19, 2015

Wal-Mart’s advertising slogan is “Save money, live better,” but for years the world’s largest retailer has been criticized for not paying its workers enough to do that.

Now, facing rising minimum wages in California and other states, competition for employees and a poor corporate image, Wal-Mart Stores Inc. said Thursday it would raise the minimum pay to $9 an hour for nearly 40% of its U.S. workforce.

The action is a major milestone in the growing movement to lift the pay of the nation’s lowest-paid workers as the gap between rich and poor has widened. It’s also a nod to a strengthening economic recovery in which the labor market has expanded by more than 200,000 jobs every month, giving workers more choices.
Wal-Mart is raising its minimum wage

Advocates for low-wage workers cheered the news after years of pressuring the company to raise wages. But they said the pay increases fell short of what workers need and demonstrated that the federal minimum wage needs to be raised.

Starting in April, about 500,000 Wal-Mart employees will get a raise to the new level — $1.75 an hour more than the federal minimum wage — as part of major changes to the company’s hiring, training, scheduling and compensation programs. Next February, current employees will receive another raise, to at least $10 an hour.

“We’re always trying to do the right thing and build a stronger business,” Chief Executive Doug McMillon said in a letter to employees. “We frequently get it right, but sometimes we don’t. When we don’t, we adjust.”

The changes will bump up the average hourly wage for a full-time worker to $13 an hour from $12.85, the company said. In addition, the company said it is raising the caps on pay ranges for jobs, giving hope to those in states such as California where the minimum wage already is $9 an hour

Juanita Cason, 24, for instance, makes $9.40 an hour at the Baldwin Hills Wal-Mart, and a bump to at least $10 would help the single mother provide for her infant daughter, Zah’Mya.

Moreover, Cason said as she arranged pink scooters near the store’s toy area, “it would make it worth it to be here.”

Wal-Mart said the pay raises will cost the company more than $1 billion this fiscal year, which began Feb. 1. Wall Street balked: Shares fell $2.77, or 3.2%, to $83.52.

But higher wages for low-income workers lead to greater productivity, said Justin Wolfers, a senior fellow at the Peterson Institute for International Economics.

“You know the old saying ‘Pay peanuts, get monkeys’? If you want better than monkeys, you’ve got to pay a little bit more,” he said. “Paying above the minimum wage is by no means a radical step.”

The pay raises make sense for Wal-Mart, which will save money by not having to train new employees continually because of turnover, said Craig Johnson, president of Customer Growth Partners.

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