Wal-Mart to lift all workers above $7.25

Fewer than 6,000 of its U.S. employees now below federal hourly minimum

Wal-Mart is taking steps to ensure that all of its 1.3 million workers in the United States are earning at least more than the federal minimum wage.

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Changes to employee pay could come in a matter of months, possibly as early as the first quarter of 2015, the company said Thursday. CEO Doug McMillon has alluded to the wage increase in multiple interviews since October.

"We're going to make changes in a few months that will create a situation where no Wal-Mart associate in the United States makes federal minimum wage," McMillon told CBS. "We'll be ahead of that with our starting wage."

Details of McMillon's plan are still being shaped, but the company is "actively working" on increased compensation for some employees, company spokesman Kory Lundberg said. Currently the retailer has fewer than 6,000 of its 1.3 million employees in the United States making below the federal minimum wage of $7.25 per hour. In states where the minimum wage is higher, Wal-Mart currently is paying employees above the federal minimum.

"How many people it affects is going to be driven on what the start rate gets set at," Lundberg said. "We just don't have any specifics right now to share."

Wal-Mart has come under criticism for its treatment of employees, particularly its hourly workers. OUR Walmart, an organization aimed at unionizing the retailer's employees, has called for the company to pay a minimum $15 an hour. A study conducted by University of Georgia economics professor Jeffrey Dorfman put the average wage of hourly Wal-Mart workers at $12.94.

"Mr. McMillon's announcement to increase its minimum wage shows that the company is feeling growing pressure from Walmart workers and their supporters to publicly commit to raise its wages," Cantarec Davunt, a Wal-Mart worker in Minnesota, said in a statement released by OUR Walmart. "But with too many Walmart workers like me struggling to pay our bills or feed our families on less than $25,000 a year, the gesture of increasing the company's minimum wage doesn't do nearly enough."

It seems unlikely to company watchers that the retailer would be willing to go as high as the $15 hourly wage, but investors are paying attention. Randy Koontz, first vice president of investments for Pinnacle Wealth Management of Raymond James & Associates Inc. in Rogers, said the move should help Wal-Mart build good will with the public if nothing else.

Without the benefit of knowing how much the wage increase is or specifically the number of employees affected, Koontz said, it's hard to get a feel of what the effect would be on Wal-Mart's bottom line. Whatever the cost, Koontz said, it could be worth it for Wal-Mart from a public-relations standpoint.

"It's obvious that Doug is probably more media-savvy than the last couple of CEOs they've had," Koontz said. "I think if it's less than 10,000 associates out of 1.3 million, it's good PR that wouldn't seem to cost a lot. Doug started out as an hourly worker; he understands what they're facing. I don't know if he ever made minimum wage, but he started in the trenches, and you'd imagine he feels more of a kinship to those people than maybe other CEOs who have never had that experience."

McMillon, 48, began his career with Wal-Mart 30 years ago while looking for a summer job. He earned more than $9 million in 2013. He has defended the retailer's treatment of employees and pointed to himself as an example of how the company offers opportunity from within. Prior to being named CEO of the $473 billion retail giant in February, McMillon was CEO of Wal-Mart International.

"In the world there is a debate over inequity; sometimes we get caught up in that. Retail does in general," McMillon told CBS. "We couldn't run a good business if we didn't take care of people and have compensation plans that work."

Business on 12/12/2014

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