walmart store worker coronavirus cleaning sanitation
Courtesy of Walmart
  • Walmart announced it would raise pay for some workers, while maintaining $11 starting wage.
  • CEO Doug McMillon said the raises will help the company create a “ladder of opportunity.”
  • He also said a $15 minimum wage should be paced in a way that benefits the US economy.
  • Visit the Business section of Insider for more stories.

Walmart announced Thursday that it would raise wages for some workers while maintaining an $11 starting pay. 

Chief executive Doug McMillon said the increases are designed to create a “ladder” system for worker promotions at the country’s largest retailer and biggest private sector employer. The raise, which will bring 425,000 associates’ pay to between $13 and $19 per hour, will go into effect March 13. 

“Those people that we’re raising wages for tend to have been with us for a longer period of time than someone that might be earning the entry wage,” McMillon said on a conference call with investors. “We’re trying to … create this ladder of opportunity, providing an opportunity for people when they start with the company to build a career like so many of us already have.”

The company chose not to raise their starting wages, which will stay at $11 per hour despite pressure to raise the minimum to $15 per hour. Over the past few years, competitors including Amazon, Target, and Costco have raised their minimum pay to $15 per hour in recent years after worker groups and labor advocates called for the increase. Walmart says its average pay in the US is above the $15 per hour threshold. 

McMillon said the company would not be able to implement the ladder structure – which is designed to help employees move up through the company –  if a $15 minimum wage went into effect. Though, he said the company, which has raised wages from $9 to $11 in the past five years, plans to continue raising wages over time and will comply with state minimum wages. 

McMillon also said the investment will help support Walmart's new structure which prioritizes digital sales - a sector that soared since the coronavirus pandemic started.  McMillon has said in the past that he supports efforts to raise the minimum wage above the $7.25, where it has been stuck since 2009.  President Joe Biden plans to include the raise in his $1.9 trillion stimulus plan.

Several members of the Democratic party have also advocated for a "livable wage" and plan to increase the minimum wage to $15 by 2025. The non-partisan Congressional Budget Office released an analysis of the party's Raise the Wage Act in February which found that the pay hike could result in 1.4 million lost jobs. 

"We're obviously really well aware of what's happening nationally with this discussion around $15 and think that that's an important target but also think that that should be paced in a way that's good for the US economy," McMillon said. "You can kind of see us as a model, working through how that works, but I'm really excited to raise the wages today for so many people."

In the fourth quarter of 2020, Walmart's digital sales surpassed Wall Street expectations three times over, as customers looked to shop from home during the pandemic and demand for household goods rose as consumer behavior favored stockpiling, CFO Brett Biggs said on the call. Walmart recorded nearly $100 billion in sales in its fourth quarter. US sales alone grew by $29 billion.

"This year really fast forwarded things in terms of customer behavior and we think the majority of that behavior is going to last," McMillon said regarding customers' interest in online shopping.

Read the original article on Business Insider