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Unintended consequence of Wal-Mart’s raise: Unhappy workers

Shoppers leave a Wal-Mart in Danvers, Mass. When Wal-Mart Stores Inc. chief Doug McMillon announced plans to boost store workers’ minimum wage earlier this year, he said the move was intended to improve morale and retain employees. Yet for some of the hundreds of thousands of workers getting no raise, the policy is having the opposite effect.
Shoppers leave a Wal-Mart in Danvers, Mass. When Wal-Mart Stores Inc. chief Doug McMillon announced plans to boost store workers’ minimum wage earlier this year, he said the move was intended to improve morale and retain employees. Yet for some of the hundreds of thousands of workers getting no raise, the policy is having the opposite effect. AP

When Wal-Mart Stores Inc. chief Doug McMillon announced plans to boost store workers’ minimum wage earlier this year, he said the move was intended to improve morale and retain employees.

Yet for some of the hundreds of thousands of workers getting no raise, the policy is having the opposite effect.

In interviews and in hundreds of comments on Facebook, Wal- Mart employees are calling the move unfair to senior workers who got no increase and now make the same or close to what newer, less experienced colleagues earn. New workers started making a minimum of $9 an hour in April and will get at least $10 an hour in February.

“It is pitting people against each other,” said Charmaine Givens-Thomas, a 10-year Wal-Mart veteran. “It hurts morale when people feel like they aren’t being appreciated. I hear people every day talking about looking for other jobs and wanting to remove themselves from Wal-Mart and a job that will make them feel like that.”

Givens-Thomas makes $12 an hour at a store near Chicago and belongs to OUR Walmart, a union-backed group that has lobbied for better working conditions. She said she has been on medical leave since last August and keeps in close contact with her colleagues at the store.

Some workers also said they suspect their hours are being cut and annual raises reduced to cover the cost of the wage increase for newer workers. Wal-Mart denies that and says it’s taking steps to ensure all employees have an opportunity to move into higher-paying jobs. Along with bumping up the minimum wage, it increased the amount workers receive when promoted, boosted pay for some managers and raised the maximum pay for all hourly positions.

Wage Inequality

Several U.S. retailers have raised the minimum wage for their workers in recent months, among them Gap Inc., TJX Cos. and Target Corp. The moves were widely hailed amid calls to combat wage inequality – an issue that even reached the U.S. Securities and Exchange Commission, which on Wednesday voted to force companies to reveal the pay gap between the chief executive officer and their typical worker.

However, if Wal-Mart and other retailers don’t also adjust pay for veteran hourly workers, they could face rising dissent, said David Cooper, an economic analyst at the Economic Policy Institute. Typically, when employers boost their base pay, they also give raises to those making within $1 to $2 of the new minimum to preserve a type of wage hierarchy and keep their longer-time workers happy, studies show.

“Companies want to preserve some type of internal wage ladder, so to do that they have to adjust wages of folks above the new minimum,” Cooper said. If Wal-Mart doesn’t raise wages for these workers, “folks are going to leave or start complaining more vocally,” he said.

Feeling Disenfranchised

Executives knew the minimum wage hike would make those left out feel disenfranchised, said Kristin Oliver, Wal-Mart’s U.S. human resources chief. Since then, the company has been hearing from upset employees and understands that the new wage policy could lead to increased turnover, she said.

In an attempt to retain workers who didn’t get a raise, Wal-Mart has changed its scheduling system to help workers get the hours they want and started a new training program for employees looking to advance within the company. Wal-Mart announced the scheduling changes as well as a new training program at the same time as the wage increase to address the different needs of its workers, Wal-Mart spokesman Kory Lundberg said.

“We are constantly looking and evolving what the right pay should be and we were aware of the issue,” Oliver said. “We weren’t prepared to go forward with any additional increases but have continued to look at it to see if there is something else we should do for those in the middle.”

Giving additional raises to employees already making close to the new minimum wage would cost Wal-Mart about $400 million, said Jeannette Wicks-Lim, an assistant research professor at the University of Massachusetts, Amherst. She based her calculation on raises the retail industry has handed out after past increases to state and federal minimum wages. Wal-Mart declined to comment on her calculation.

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