Sam’s Club, a membership club under Walmart, has announced an increase in its minimum wage from $15 to $16 per hour starting in November. Additionally, the company will raise wages for its nearly 100,000 employees by 3% to 6% based on their tenure. This move is intended to incentivize employees to stay with the company and not defect to competitors like Costco, which pays a minimum wage of $19.50 an hour. Sam’s Club aims to improve customer service by retaining a stable workforce of higher-paid employees.
Chris Nicholas, the CEO of Sam’s Club, stated that the company’s goal is to create good jobs that can turn into great careers, emphasizing the importance of stability in the club model. The retail industry has seen an increase in wages in recent years as employers compete for staff in a tight labor market. Average hourly wages for retail employees have risen by around 16% since April 2020, reflecting the need for firms to reduce turnover levels and retain employees.
Despite the wage increases, $16 an hour may not cover the cost of living in many locations in the United States. MIT’s living wage calculator estimates the income needed to meet basic needs, highlighting the ongoing challenges faced by low-wage workers. Sam’s Club’s new wage structure includes meaningful annual raises that increase with tenure, with employees able to receive raises of up to 6% per year until they hit the maximum pay rate. This is a positive change for workers and aligns with Costco’s industry-leading wages and wage growth for long-tenured employees.
Sam’s Club has made several changes in recent years to attract and retain employees, including increasing starting pay from $11 per hour, offering annual stock grants, and implementing block schedules for more consistent work hours. The company’s latest move to raise wages is part of its efforts to make the company more appealing to employees, especially amidst the boom in warehouse clubs during the pandemic. Sam’s Club, Costco, and BJ’s Wholesale Club have added millions of new members, with customers seeing value in buying in bulk at warehouse clubs and being willing to pay annual membership fees.
Sales at Sam’s Club’s stores have seen growth, with a 2.3% increase in the latest fiscal year and a 14.6% increase in the previous year. The company’s expansion and increased demand have created a need for more employees, prompting the decision to raise wages to attract and retain talent. Sam’s Club’s focus on creating good jobs, offering competitive wages, and implementing initiatives to improve employee retention is part of its strategy to stay competitive in the retail industry and maintain growth in the face of increasing demand for warehouse clubs.
