On Tuesday (September 17th), Sam’s Club, a subsidiary of Walmart, announced that it will raise employee salaries to incentivize them to stay with the company rather than switch to Costco, one of Sam’s Club’s main competitors.
Sam’s Club is a membership-based club under Walmart, operating around 600 stores, and will increase the minimum wage from $15 to $16 per hour starting in November. The company will also raise the wages of nearly 100,000 employees, with raises ranging from 3% to 6% based on their length of service.
Previously, hourly workers at Sam’s Club could receive a 3% annual raise until they reached the maximum wage. (Some positions at Sam’s Club have a maximum hourly wage of $36.) Under the new plan, employees with longer tenures at the company can receive up to a 6% raise annually until they reach the maximum wage. Once at the maximum wage, they will receive a one-time payment equivalent to 6% of their annual salary.
Sam’s Club charges its regular members a $50 annual fee. To retain and increase membership numbers, Sam’s Club must raise customer service standards. The store hopes to have a stable, high-wage workforce and retain them through financial incentives. Costco, a major competitor of Sam’s Club, ranks among the top in retail wages with a minimum hourly wage of $19.50. Therefore, Sam’s Club needs to increase wages to remain competitive with Costco and other retail chains that have already raised wages.
For a long time, low wages, arduous work, and unpredictable schedules have made the U.S. retail industry unattractive to job seekers. During the pandemic, employees faced unruly shoppers and mask mandates, leading to a surge in employee turnover. Hourly wages in the U.S. saw a significant increase during the pandemic, but since then, the overall increase has been more moderate.
As employers raise wages for store and warehouse workers in a tight labor market, retail wages are on the rise. Since April 2020, the average hourly wage for retail workers has increased by about 16%, rising from $21.18 per hour to $24.48 per hour in August this year.
Since the outbreak of the pandemic in 2020, warehouse-style stores have thrived, with Sam’s Club, Costco, and BJ’s Wholesale Club adding millions of new members. Many customers believe bulk shopping at warehouse-style stores is worth it and are willing to pay annual fees.
Walmart, the world’s largest retailer, employs approximately 1.6 million people in the U.S. The company has started offering annual stock bonuses to its managers this year and has increased their compensation.
Sam’s Club stores open for at least a year saw a sales growth of 2.3% in the most recent fiscal year, compared to a growth of 14.6% the previous year.