On Thursday, Wal-Mart announced that it would raise its minimum hourly wage for 500,000 employees.
This chart is why.
This chart, first flagged by Bloomberg’s Joe Weisenthal, comes from the monthly JOLTS report — which shows the number of job openings in the economy — and shows the quits rate for workers in the retail trade industry.
On Thursday we noted that as labour market slack diminishes and the balance of power swings towards employees from employers, companies would be pressured to either compensate their staff better or see people leave for better paying jobs.
On a conference call with the media following Wal-Mart’s announcement, Doug McMillon, Wal-Mart CEO, said:
“But on the wage decision, I think it’s important to remember that we react one store at a time to whatever wage rates we need to attract and retain the talent that is required to run our business. So today, there’s some discussion, obviously, around minimums. But as you think about cities, individual stores, certainly states, we have higher wage rates to make sure that we’re competitive in the marketplace, and of course we’ll continue to do that.”
And so while Wal-Mart’s decision on Thursday is its broad initiative on wages, McMillon makes clear that the company is prepared to do more to retain employees.
And this is great news for the economy for one big reason: the labour market right now requires that you pay employees better, or see them walk out the door.