Walmart $1 Billion Investment Reaffirms Importance of Total Compensation

Everywhere you turn, there’s more news about big companies like Target, McDonald’s and TJ Maxx raising the minimum wage. But as any savvy professional knows, wages are only a piece of the total compensation puzzle. A stunning 1 billion dollar investment by Walmart affirms this fact.

An investment in total compensation

The company proposed an investment in workforce training, in addition to progressive increases to starting wages and increases over the next few years. These efforts also include more structured employee on-boarding programs, leadership development, better benefits (such as more affordable health benefit options and self-managed schedules), as well as a commitment to working with local colleges and universities to enhance programs that prepare the future workforce for jobs in retail and customer service.

According to Walmart’s official statement, “Ultimately, we believe this package of changes will benefit associates, customers and the business. When added all up, a job at Walmart comes with good wages and a clearer, merit-based path to promotions and raises. It comes with scheduling that works with an associate’s life. It comes with health care benefits, bonus opportunities, a 401(k) and paid sick-leave. It includes education and training opportunities that are relevant whether a person stays on at Walmart or chooses another path.”

What we like about this move

Walmart is moving from a focus on pure base wages to a more sophisticated, modern approach to total compensation. We know modern workers care deeply about workplace benefits like increased training, career mapping, and workplace schedule flexibility.

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PayScale has been a strong proponent of raising living wages, as they’ve struggled to keep up with inflation and housing costs for years. The PayScale Index illustrates this. Since 2006, wages have risen 7.5 percent overall in the US. But when you factor in inflation, “real wages” have actually fallen 6.5 percent. It’s not much for the average person to survive on, let alone someone who works long hours in retail trying to support a family on minimum wage. Walmart’s movement towards investing in a long term strategy of developing people is a good move. Why? They are looking into the future and providing ample opportunities for hard working people to get trained in management roles so they can experience career growth.

What could be improved

The Walmart plan doesn’t fully address the main problem, which is that part time workers still don’t get good health benefits.

While the rise in wages could be seen as laudable, a bump in pay is not enough for a lot of workers. Consider that a vast majority of employees at retail chains like Walmart are generally part timers. A New York Times article, written by Hiroko Tabuchi, highlights this issue. In 2007, Walmart employed some 19.2 million workers, 685,000 of those that were involuntarily part-time; as of 2014, the number of part time employees has more than doubled.

Because they are in many low-paying positions, this means that many part time Walmart employees are more likely to qualify for public assistance or not be eligible at all for the health insurance benefits offered to employees who work 30 hours or more per week. Many of these folks are parents trying to raise families and individuals who are already struggling to pay for their basic needs – forced to work second, even third-jobs to make ends meet.

While we applaud the efforts of leading retail companies like Walmart, Target, TJMaxx, and others for their efforts to improve compensation for millions of workers around the globe, we think it will be a long time before any real impact will be felt. This is not about publicity, it’s about improving lives. We encourage companies to take a look at their human capital from the perspective of a happier and healthier workforce as a result of increased hours that enable individuals and families to afford health insurance, housing costs, education, and other basic services. Only when these things take place will we start to see a shift in the quality and productivity of our hardest working members of society.

What do you think?

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