Wal-Mart Adopts New Wage Structure; Lower Starting Salaries Signal Shift In U.S. Labor Market

Wal-Mart is lowering wages for new workers at its stores for roles that involve stocking shelves and online order fulfillment.

The Wall Street Journal reports that the new pay structure establishes that those workers will earn the lowest possible hourly wage in the stores that they are hired in. Wal-Mart told the Journal that the adjustments are expected to give a more consistent pay structure across the various roles of the company.

“Consistent starting pay results in consistent staffing and better customer service while also creating new opportunities for associates to gain new skills from experience across the store and lay the groundwork for their career regardless of where they start,” according to the company.

Wal-Mart’s cuts to salary come after companies raised compensation in the retail sector in order to attract workers during the COVID-19 pandemic. However, it looks like the labor market is starting to plateau.

According to the most recent numbers from the Department of Labor, the number of jobs created in August is 187,000, down from the average of 271,000 jobs over 12 months.

Even though Wal-Mart cut wages for new workers, it increased compensation for existing employees, which gave around 50,000 workers a pay bump. As the nation’s largest private employer, Wal-Mart has a considerable influence on the labor market for hourly workers, which means that other companies could decide to follow Wal-Mart’s lead and lower wages for their new hires.

Bill Adams, chief economist at Comerica Bank told Fortune, “After huge disruptions in the last few years, the labor market is settling into a more normal state,”

Adams explained. “While most Americans who want a job have one, it is not as easy to find new work as a year ago. Hires and quits are back to their pre-pandemic levels, and job openings are falling rapidly. At the same time, employers are having a slightly easier time attracting and retaining workers.”