Saturday, October 29, 2016

How are those pay raises working out for Walmart?

In early 2015 Walmart made a strategic decision to start paying higher wages to store employees.  Starting pay went up to $10/hour with department managers getting bumped up to $15/hour.  Walmart also started investing more in training that would make workers promotable.  What happened?

According to a recent NYT article, the good news is that customer satisfaction and sales have both increased.  The not so good news is that profits have lagged the averages for S&P Retail and the S&P 500.  Managers report that Walmart is now attracting a different sort of employee, one looking for a career instead of just a job.  Productivity seems to be higher as well.  Conceivably the profit situation will turn around once enough workers have been trained that Walmart can get a return on the training investments.

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