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.

Walmart boosts wages

Big news from Walmart, on top of falling prices we now have rising wages!  Today the nation's largest retailer announced that it was going to make sure that all of its US workers would earn at least $9 an hour by April.  According to NYT, this is likely to affect half a million employees.  It will certainly be a big boost to those earning the minimum wage.

Walmart's motivation is most likely competitive pressure.  The unemployment rate keeps dropping, which means employers are competing for fewer applicants.  Walmart's move is likely to put more pressure on firms such as Target and Home Depot to raise pay.

There also is a chance that the wage increase pay for itself.  As MBA 505 students know, a higher wage reduces turnover and thus reduces hiring and training costs.  A higher wage also should be associated with higher standards for individual productivity.