Retailer increased wages but did not expect what happened next

When a major retail chain increased the wages of its lowest paid workers it thought it would boost morale but things haven’t quite paid off.

BY Steve Randall 07 Aug 2015

What could be better for boosting morale and productivity amongst a company’s lowest paid workers than an increase in wages?

That’s what retail giant Wal-Mart thought when it announced that it was increasing its minimum wage earlier this year. The employer believed that staff would have a new enthusiasm for the company. It imagined that happy workers would be more productive and reducing the number of exits from the firm would save on recruitment and training of replacements.

So far this all seems to make sense. Unfortunately, Wal-Mart has found that staff are taking to social media sites complaining that new employees are now earning close to that of more senior and long-term colleagues.

While those starting work at the retailer are pleased to be earning $9 an hour now, and soon to be on $10 an hour; those who have been with the firm longer feel that they are not being shown its appreciation for their hard work and loyalty.

There is also a suspicion that working hours and annual increases for existing workers will be cut to pay for their new colleagues. That has been denied by Wal-Mart.

David Cooper from the Economic Policy Institute told Bloomberg: “Companies want to preserve some type of internal wage ladder, so to do that they have to adjust wages of folks above the new minimum.” Those who are feeling that they are not appreciated are reportedly seeking other jobs.

Kristen Oliver, Wal-Mart’s HR chief says that the firm has introduced programs to give employees the chance to grow within the company.

Human nature dictates though that workers like to feel that they are being treated equally. Even if they are offered opportunities and programs that may in reality be more valuable than a wage increase, most workers would still rather receive the extra money, which is a tangible benefit, compared to benefits which may cost the employer more but are intangible.