by - Home Depot is spending $1 billion to increase wages for hourly workers, the company said Tuesday.
- Walmart also announced last month that it would raise its minimum wage to $14 an hour.
- The moves come as retailers try to hoard workers so they are prepared when business picks up again.
Walmart and Home Depot are stepping up spending in a fight for retail workers.
Home Depot said Tuesday it will spend $1 billion to increase wages for hourly workers, bringing the company’s starting wage to at least $15 an hour nationwide. The company also announced that it would pay reasonable salary increases to current employees.
The news follows a similar move by Walmart, which announced last month that it would raise its minimum wage from $12 to $14 an hour starting in March. The Bentonville, Arkansas-based company said the average US worker would be making $17.50 an hour as a result of the wage floor.
Both Walmart and Home Depot said they hoped the raises would boost employee retention and hiring.
The investments show how tight the job market for retail workers remains, even amid warnings of a possible recession and a spate of layoffs from companies in technology, media and other industries.
Retail workers are quitting faster than the national average, and retail had the second most job vacancies of any industry as of December 2022.
“This $1 billion investment positions us well in the marketplace to recruit, retain and attract the best leaders because they are the future of the company,” said AnnMarie Campbell, executive vice president, US -Home Depot stores and international stores. Campbell said nearly 90% of Home Depot’s executives started on the store floor and rose through the ranks.
Walmart CEO Doug McMillan — who began his Walmart career unloading trucks — said during his company’s earnings call Tuesday, “We’re constantly adapting to create the right combination of wages, benefits and education, so that our people can build lifelong careers and reach their full potential. You can start your career assembling bikes and end up running all of our US stores.”
Home Depot’s decision to include pay increases for current workers could help stave off criticism that new hires could earn the same or more than an existing worker — a payroll phenomenon known as “compression.”
That’s one of the concerns raised by the mixed reactions from Walmart employees, who some insiders have said feel the raises don’t reward those who have stayed with the company for years. Others have said that $14 isn’t enough to cover living expenses.
“The cost of living is higher and it still makes it nearly impossible to live on your salary ($14 an hour) on your own,” a Kentucky Walmart employee previously told Insider.
With those moves, Walmart and Home Depot are the latest employers to join the list of retailers practicing what economists are calling “working shorts,” or holding on to workers despite a possible downturn.
“Given how difficult it has been for companies to expand payrolls, there’s a reluctance to let them go,” KPMG economist Kenneth Kim previously told Insider.
