Wal-Mart Stores Inc., which has been attacked over its pay and benefits, said Monday that it was raising starting wages at a third of its stores but capping the pay of veteran workers.
The nation's largest private employer is rolling out an average pay increase of 6% for new hires at 1,200 Wal-Mart and Sam's Club warehouse stores nationwide, including some of its nearly 200 stores in California.
"This is based entirely on wage surveys in every market where we do business," said John Simley, a spokesman for the Bentonville, Ark.-based company. "The goal is to remain competitive and make sure we don't get behind the envelope."
Wal-Mart is instituting the salary caps to encourage workers to move up through the ranks rather than remain in the same job for years. Employees who earn more than the maximum amount for their job won't see a salary decrease but will no longer be entitled to raises unless they change positions.
The company also said it was increasing performance-based pay raises but declined to say by how much. Overall, the moves will not increase the company's labor costs, Simley said, nor will they result in price increases.
Critics said Monday's announcement did little to change the fact that Wal-Mart pays below the national averages for retailers and has consistently fought efforts to boost workers' standard of living.
Chris Kofinis, of the union-backed group WakeUpWalMart .com, said the salary caps were little more than an effort to get rid of higher-paid veteran employees. "This is a determined attempt to push full-time workers out of this company, and they should be ashamed of themselves."
In California, Wal-Mart said, its average hourly wage was $10.50, compared with $10.11 nationally. California's minimum wage is $6.75 an hour, and Congress is considering raising the rate nationally to $7.25 an hour from $5.15.
The announcement by Wal-Mart comes as the company continues its battles against legislative oversight of how it treats workers.
Last month the Chicago City Council passed an ordinance that would require the nation's largest retailers to pay hourly wages of at least $10, with $3 in benefits, by 2010, despite a vigorous campaign by Wal-Mart against the measure. The ordinance will go into effect Sept. 13 unless vetoed by Mayor Richard Daley, who has criticized the effort as anti-business.
And last year, Maryland legislators voted to force Wal-Mart to spend more for employee health insurance, one of 30 such measures that have been under consideration around the country.
Although the Maryland law was invalidated in federal court last month, a similar measure in California has passed the state Senate and is pending in an Assembly committee.
Monday's announcement is aimed more at public opinion than at Wall Street, which is likely to be indifferent to the news, said Mark Husson, an analyst with HSBC in New York. Wal-Mart shares fell 5 cents to $44.82 on Monday.
"It seems to me that Wal-Mart is trying to make some kind of PR out of the fact that you have to pay a market rate, otherwise nobody turns out for their jobs," Husson said. "It sounds like they are paying upfront and finding the money by capping the wages in the future."
The salary caps are unfair to employees who have worked their way up the pay scale, said Delora Lewis, a 14-year Wal-Mart veteran who works as a cashier in Ponca City, Okla.
A good worker ought to be able to earn raises through hard work and dedication, she said, without having to increase responsibilities or time spent at work.
"It makes me mad," said Lewis, who said she believed that at $15.82 an hour she was paid more than the maximum that would be allowed for cashiers at her store.
"If I quit and start over someplace else, I'd have to start at $8 an hour. You're kind of stuck in a rut. And they know it, so they've got it over your head and you stay and put up with it."
Wal-Mart's moves were more indicative of the company's constant need for new workers than any major policy change, Husson said.
"I don't think this says very much other than that 'We hire lots and lots of people,' " Husson said. " 'But in case the market gets overly concerned that Wal-Mart is no longer a low-cost retailer, we'll throw this salary cap in there to show people we haven't gone mad with our labor costs.' "