Wal-Mart, under pressure, boosts minimum U.S. wage to $9 an hour
By Sruthi Ramakrishnan and Nathan Layne
(Reuters) - Wal-Mart Stores Inc (WMT.N: Quote) said it would raise entry-level wages to $9 an hour, a 24 percent increase from the U.S. minimum wage that some employees now earn, succumbing to longstanding pressure to pay its workforce more.
The world's largest retailer said the increases would cost it $1 billion and impact 500,000 employees, or about 40 percent of its workforce, although the hike falls short of what some labor groups have been agitating for.
The move comes amid a growing debate in the U.S. over the widening gulf between the rich and low-income workers. Wal-Mart has been a prime target of critics who say its low-wages and inflexible scheduling are a big part of the problem.
The White House praised the move, pointing out that 17 states have already moved to boost their minimum wages above the federal level of $7.25 an hour and renewing its call on the Republican Congress to boost the wage on a national level.
"But given their recalcitrance on this because Republicans keep blocking it, we’re going to continue to keep making progress in other ways,” White House spokesman Eric Schultz told reporters.
Chief Executive Doug McMillon, who took the post about a year ago, told reporters on a media call that he wanted Wal-Mart to be a "ladder of opportunity" for workers and that the investments in wages would ensure employees are "highly engaged in our business."
Investors, worried about the bottom-line implications even after the retailer reported better-than-forecast profits, pushed Wal-Mart's shares down 2.9 percent to $83.77 in afternoon trade, making it the biggest decliner on the Dow Jones Industrial average .DJI.
The company acknowledged that the wage bumps would dent profits this year but said they would improve customer service over the longer term, addressing issues that have in part been blamed on low wages, as well as a paucity of workers at its stores. Continued...