Walmart Plans Wage Increase for Hourly Workers Despite Poor Earnings Performance

Digital and Inventory Workers Numbering 425,000 to Receive Minimum Wage Increase to $15 per Hour
Decision Reflects Online Sales Growth
Also Seen as Aligning with Biden Administration's Policies

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Walmart, the largest retail chain in the United States, is pushing for an increase in the hourly wages of its hourly workers. Despite recording poor performance in the fourth quarter of last year and having a bleak outlook for this year, Walmart's move to raise workers' wages has attracted attention to the background behind this decision.

According to the Wall Street Journal (WSJ) on the 18th (local time), Walmart announced in its earnings report released the same day that it recorded a net loss of approximately $2.1 billion (about 2.3247 trillion KRW) in the fourth quarter of last year. This is a significant decrease compared to the net profit of $4.14 billion recorded in the same period the previous year.

On the other hand, sales increased by 7.3% during the same period to $152.1 billion, surpassing market expectations. The sales growth was driven by a surge in online grocery orders due to the COVID-19 pandemic last year, with e-commerce-related sales confirmed to have increased by 69% compared to the same period the previous year. However, sales growth is expected to slow down this year.

Amid this, Walmart announced that starting March 13, it will raise the hourly wages to at least $15 for approximately 425,000 digital and inventory workers. This exceeds the average hourly wage of $14 in January last year and the $11 hourly minimum wage level for workers in the United States.

John Furner, Walmart's Chief Executive Officer (CEO), said in a memo sent to employees on the same day, "Last year, we witnessed significant changes due to the COVID-19 pandemic, and these changes are expected to continue." He added, "Accordingly, approximately 425,000 frontline store employees engaged in digital and logistics-related work will receive wages ranging from $13 to $19 per hour depending on the store location."

This reflects the expectation that the increase in online sales due to COVID-19 will continue in the future, and Walmart intends to share the fruits of growth with its employees.

This move also aligns with the Biden administration's minimum wage increase policy, leading to interpretations that Walmart is aligning itself with the Biden administration. President Joe Biden has pledged to gradually raise the federal minimum wage to around $15 during his term.

Meanwhile, during the COVID-19 pandemic, Walmart competed with companies like Amazon for logistics center personnel to handle the surge in online orders. In response to the skyrocketing demand during the pandemic last year, Walmart created 150,000 part-time jobs and has been strengthening compensation by providing bonuses to workers.

This content was produced with the assistance of AI translation services.