Walmart Faces Controversy Over Cuts to Starting Pay for New Store Employees
In a decision that has sparked controversy, Walmart has announced that it will be reducing the starting pay for new store employees who pick and pack online orders and stock shelves. This move has raised questions about whether companies are experiencing a cooling labor market or simply adjusting to a return to pre-pandemic shopping habits.
The retail giant confirmed that starting wages were lowered in July for personal shoppers and stockers who recently joined the company. These employees are responsible for preparing orders for curbside pickup or delivery and restocking store shelves. As a result, new Walmart employees on the digital or stocking teams now earn about a dollar less per hour than they would have if hired a few months ago.
Walmart spokeswoman Anne Hatfield clarified that this wage reduction does not affect current employees in those roles. She also mentioned that, as part of the change in July, Walmart adjusted the pay bands for more experienced employees, resulting in a wage increase for approximately 50,000 store employees.
Walmart, the largest private employer in the U.S. with 1.6 million employees, is closely watched by economists and industry leaders for signs of cooling wage and merchandise inflation. Earlier this year, the company had raised its minimum wage for store employees from $12 to $14, as it lagged behind competitors like Amazon and Target.
When asked if the company has experienced an easier time hiring due to the pay cuts, Hatfield declined to comment. However, in a statement, Walmart stated that the change was made to ensure consistent starting pay across different store roles, whether it be for cashiers, shelf stockers, or employees assisting with online orders. The company believes that consistent starting pay leads to consistent staffing, better customer service, and provides associates with the opportunity to gain new skills.
According to The Wall Street Journal, which first reported the news of wage changes, Walmart’s personal shoppers and stockers started receiving higher pay in March 2021. The new starting rates ranged from $13 to $19 per hour, depending on the store’s location and market. This change aimed to treat these employees more like specialists, similar to workers in other specialized roles within the company.
At the time of implementing these changes, Walmart was experiencing heightened grocery and e-commerce sales. With more Americans getting vaccinated and eagerly returning to pre-pandemic activities, the company saw a surge in sales and the need to adapt to evolving customer shopping habits. The memo announcing the pay adjustments cited the significant growth in company sales and the increasing demand for pickup and delivery services.
While many retailers have seen a resurgence in in-store shopping and declining e-commerce sales, Walmart has continued to thrive in both sectors. In the most recent fiscal quarter, Walmart U.S. reported a 24% year-over-year increase in e-commerce sales. However, these gains were not as dramatic as those witnessed during the early stages of the pandemic.
Despite the controversy surrounding the wage cuts, Walmart’s shares reached a 52-week high on Thursday. The company’s stock has increased by approximately 15% this year, just slightly behind the gains of the S&P 500 but ahead of many other retailers.