Walmart is raising the minimum wage as the retail job market remains tight

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An employee arranges gift boxes for beauty products for sale at a Wal-Mart Stores Inc. location. in Los Angeles, California.

Patrick T Fallon | Bloomberg | Getty Images

walmart said on Tuesday it is raising its minimum wage for store associates to $14 an hour, representing about a 17% increase for the workers who stock the shelves and serve customers.

As of early March, store associates earn between $14 and $19 per hour. They currently earn between $12 and $18 an hour, according to Walmart spokeswoman Anne Hatfield.

With the move, the average U.S. retailer wage is expected to exceed $17.50, Walmart’s U.S. CEO John Furner said in an employee memo Tuesday.

About 340,000 store employees will receive a raise because of the move, Hatfield said. That equates to a pay rise for about 21% of Walmart’s 1.6 million employees.

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The retail giant, the country’s largest private employer, is moving over wages at an interesting time. Some economists are calling for a recession. Prominent tech companies, media organizations and banks, including Google, Amazon and Goldman Sachs, have laid off thousands of workers and set off alarm bells. And weaker sales trends have prompted retailers, including Macy’s and Lululemonto recently warn investors of a tougher year ahead.

But so far retailers have largely avoided job cuts. Instead, they are still struggling with a tight labor market.

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Compared to other industries, the retail industry typically has a higher turnover rate than other industries, allowing employers to manage their workforce by slowing down job replenishment, said Gregory Daco, chief economist of EY Parthenon, Ernst & Young’s global strategy consulting arm.

Still, he said retailers can also plan cautiously. For the past 18 months, they’ve had to work harder to recruit and retain employees. If they lose too many employees, he said, hiring and training new employees could be costly.

“Every retailer will have to think hard about laying off a large part of their workforce,” he said.

In Walmart’s employee memo, Furner said the pay raise will be part of many employees’ annual raises. Some of those pay increases will also go to store employees working in parts of the country where the job market is more competitive, the company said.

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Walmart softens other benefits to attract and retain employees as well. Furner said the company is adding more college degrees and certificates to its Live Better U program, which covers tuition and fees for part-time and full-time workers. It is also creating more high-paying positions in its auto care centers and recruiting employees to become truck drivers, a job that can pay up to $110,000 in the first year.

This story is evolving. Check back later for updates.

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