September 9th 2023.
Walmart recently announced that it will be lowering wages for new workers in roles such as stocking shelves and order fulfillment. According to the Wall Street Journal, the new pay structure will establish the lowest possible hourly wage for those hired.
The company stated that this change is meant to bring consistency to the pay structure across different roles and to provide associates with more opportunity for career advancement. They also explained that this could lead to better customer service and an improved staffing experience.
However, Walmart's decision to cut wages for new workers comes after companies in the retail sector raised their compensation in order to attract workers during the COVID-19 pandemic. Now, the labor market is beginning to plateau. According to the Department of Labor, the number of jobs created in August is 187,000 - much lower than the twelve-month average of 271,000.
Despite cutting wages for new workers, Walmart raised compensation for existing employees, giving an estimated 50,000 employees a pay bump. As the largest private employer in the United States, Walmart's actions could have a considerable impact on the labor market, causing other companies to follow suit and lower wages for their new hires.
Bill Adams, Chief Economist at Comerica Bank, believes that the labor market is stabilizing. He told Fortune, “After huge disruptions in the last few years, the labor market is settling into a more normal state. Most Americans who want a job have one, it is not as easy to find new work as a year ago. Hires and quits are back to their pre-pandemic levels, and job openings are falling rapidly. At the same time, employers are having a slightly easier time attracting and retaining workers.”
Ultimately, this shift in wages could lead to a new normal for the labor market. It will be interesting to see if other companies follow Walmart's lead and how this will impact job seekers in the future.
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