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Walmart said yesterday that it is raising wages for all hourly workers in the US, a reflection of a continuing reality for retailers - front line staff shortages that are having an operational impact.

In a memo to all US employees, John Furner, president and CEO, Walmart U.S., announced four ways in which he said the company is investing in its employees:

"First, starting next month, we’ll begin investing in higher wages for associates. This includes a mixture of associates’ regular annual increases and targeted investments in starting rates for thousands of stores, to ensure we have attractive pay in the markets we operate. We expect these raises will bring our U.S. average hourly wage to more than $17.50. They’ll be reflected in March 2 paychecks.

"Second, we’re continuing to invest in associates who run our Auto Care Centers (ACC). Last fall we created a higher-paying ACC coach role. Now we’re introducing a higher-paying ACC team lead position and elevating the ACC tech position to a higher pay-band that reflects the special skills needed for the role and its importance to our business.

"Third, we’re adding new college degrees and certificates to our Live Better U (LBU) education program. These new options are focused on where our business is headed and will equip associates with skills to unlock new career opportunities. Both part-time and full-time associates can participate in LBU on their first day and we’ll pay 100% of the tuition and fees.

"Fourth, we’re expanding our Associate-to-Driver Program, which pays for supply chain associates to earn their commercial driver's license and become a Walmart truck driver earning up to $110,000 in their first year. As we announced last week, this development program is now also available to store associates."

The Wall Street Journal writes that "the U.S. job market has been tight, with an unemployment rate of 3.5% in December matching multi-decade lows. There are signs that the labor market is losing momentum as hiring and wage growth has cooled in December, though the number of job openings still far outpaces the number of unemployed people. 

":In November, there were 10.46 million unfilled jobs in the U.S., federal data show. Of those, 887,000 were in the retail sector and 1.52 million were in the leisure and hospitality sector—industries that often compete for the same workers. Nearly a quarter of available jobs in the U.S. were in those two lowest-wage sectors, as of the most recent data."

The Journal also notes that "the federal minimum wage is $7.25 an hour. Twenty states don’t have a minimum wage higher than the federal minimum, which was last raised in 2009, according to the Labor Department."

And CNBC writes:  "About 340,000 store employees will get a raise because of the move … That amounts to a pay increase for roughly 21% of Walmart’s 1.6 million employees.

"The retail giant, which is the country’s largest private employer, is hiking pay at an interesting moment. Weaker retail sales trends have prompted companies, including Macy’s and Lululemon, to recently warn investors about a tougher year ahead. Some economists are calling for a recession amid persistent inflation and shifting consumer habits.  Prominent tech companies, media organizations and banks, including Google, Amazon and Goldman Sachs, have laid off thousands of employees and set off alarm bells. Still, the jobs market has remained strong. Nonfarm payroll growth slowed slightly in December, but was better than expected. And the number of Americans filing new claims for unemployment benefits fell last week."

KC's View:

When the rest of the world is moving in one direction by trimming head counts, it makes sense for smart retailers that want to differentiate themselves to pivot in a different direction, to focusing on making heads count.  This is just one way to do that - increasing wages, not just eliminating bodies.  Give Walmart credit for seeming to understand that in the war it is fighting, the most important battles are taking place on the front lines.  

Not to say it is perfect.  But this is wage leadership in a way that matters.