The corporate giant, Wal-Mart, recently announced that it would be raising the wages of its lowest paid workers to nine dollars, a dollar and seventy five cents more than the federal minimum. The pay raise will affect over half a million of the Wal-Mart work force in the U.S. and add one billion dollars to Wal-Mart’s expenses each year. The company says it hopes the increased compensation will allow it to retain employees for a longer time and reduce turnover, an issue it has experienced in the past.

 

Decision makers also anticipate that better compensated employees will bring customers a better shopping experience. Wal-Mart chief executive Doug McMillan commented on the pay hike, saying “These are strategic investments in our people to reignite the sense of ownership they have in our stores. As a result, we firmly believe customers will benefit from a better store experience which can drive higher sales and returns for shareholders over time.”

 

Aside from benefitting its employees, Wal-Mart’s increase in wages has sparked pressure amongst its corporate peers to do the same. Last year, Gap increased its lowest wage to nine dollars and promised to increase it further to ten dollars per hour. TJMaxx and Marshall’s have also announced a wage increase to nine dollars coming this summer and another increase to ten dollars is promised to follow as well. CFO of Target, John Mulligan, reports pressure on the company to increase its wages as well, but it has not announced any wages coming to its employees in the near future.