Walmart has reduced pay for newly hired hourly workers to cut labor costs amid a cooling labor market.
Workers are now earning the lowest possible hourly wage for their respective store.
The big-box retailer changed its pay structure for hourly workers in mid-July.
Previously, certain new hires, like those collecting items for online orders, received a slightly higher wage than their counterparts, such as cashiers.
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This shift comes after years of steadily rising wages and increased benefits by Walmart and other major employers in response to labor shortages.
Walmart says the new wage structure will enable workers to switch between various workgroups without facing pay cuts.
The company claims that it provided raises to over 50,000 employees.
The retailer said their pay was below the new minimums under this revised structure.
Walmart views the change as an opportunity for workers to acquire new skills and potentially advance within the company.
In January, the Seattle giant announced an increase in its minimum hourly wage from $12 to $14.
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It was to remain competitive in the labor market as rivals like Amazon and Target offered starting wages of $15.
Additionally, Walmart had offered pay hikes and bonuses to certain roles, such as truck drivers.
It was during a higher demand for labor.
Many companies have introduced various perks like subsidized college courses and fertility benefits to attract and retain employees.
Walmart’s pay change reflects a broader trend in the retail industry, where companies are exploring cost-cutting measures.
It’s because of a possible consumer softness toward the end of the year, particularly during the holiday shopping season.
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David Bassuk, the global leader of the retail practice at consulting firm AlixPartners, said retailers are striving to counter rising costs and adapt to changing priorities.
While the US job market has been hot for several years, it has shown signs of cooling recently.
Hiring rates have slowed, with a slight increase in the national unemployment rate from 3.5 percent in July to 3.8 percent in August.
The average hourly earnings for workers also saw a 4.3 percent increase in August compared to the previous year, well above pre-pandemic levels.
This move by Walmart is unlikely to reduce short-term payroll costs, as it is balanced by pay raises for many other existing store employees.
