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Here's What Walmart Really Pays Its Workers

Daniel B. Kline, The Motley Fool

A shortage of workers has forced Walmart (NYSE: WMT) to both raise its minimum wage and improve its benefits. The giant retailer still pays its entry-level workers less than Target (NYSE: TGT), Amazon (NASDAQ: AMZN), and Costco (NASDAQ: COST) do, but it offers a fairly compelling total package of benefits and a path for low-level workers to advance.

Walmart has a starting wage of $11 per hour. That's below Target's $13 an hour and well below the $15 per hour paid by Amazon and Costco. Walmart, however, has been bolstering benefits for workers, including offering $1-per-day college and increased training opportunities for employees.

A busy Walmart store.

Walmart has added training opportunities for its workers. Image source: Walmart.

Can working at Walmart be a career?

While entry-level wages at Walmart may come in below those of its biggest rivals, the company isn't far off when you factor in its average wages as well as its total compensation package. Walmart pays an average wage of $14.26 for a full-time field associate (basically anyone working on its store floor or in the back warehouse). It also pays those same workers $19.31 per hour in total compensation and benefits, according to a report just released by the company.

Walmart also offers a path for advancement: 75% of its U.S. store operation management has been promoted from the ranks of its hourly workers. In addition, the company touts that its store managers -- one general manager per store -- make an average of $175,000 per year.

Training workers has become a major focus for the company. That's something that benefits both the employees, who learn skills they could take to other companies, and Walmart, which has reduced its turnover by 10% to its lowest level in five years despite the employee-friendly job market.

"One of society's greatest challenges is helping workers gain the skills and knowledge they need to succeed in the jobs of today and prepare for the jobs of tomorrow," the company wrote in its 2019 Environmental, Social, & Governance Report. "Today, millions of jobs are left unfilled as employers struggle to find workers with the skills needed to fill open positions. In the coming decades, growth in automation will likely exacerbate the skill development challenge as technology drives rapid change in the types of jobs available for workers and the capabilities they need to fulfill those roles."

It's a mutual benefit

Walmart has been moving from being just a place to work to offering a career to more of its workforce. That's laudable for the company, and it's also a smart move given the constrained labor market. In addition to retaining workers, raising wages, and improving total compensation, Walmart is now also offering a college program.

The $1-a-day college offer (where employees pay just $1 a day to attend) may be the smartest program the retailer has launched. Target, Amazon, and Costco don't offer that benefit, and workers who enter the program must continue to work at Walmart if they want to finish their degree. In addition, since the degrees offered are in areas in which Walmart needs more workers, graduates can use the skills they learn to advance at the company.

Walmart isn't leading the way when it comes to entry-level compensation, but it has built a package/career path that compares well to those of its biggest rivals. That's not something the company did out of altruism (though you can't fault it for acting as if it wants to pay more to benefit workers). Most of these changes were forced by the tightening labor market, but that does not make the benefits and improvements any less real for employees.

The vast majority of Walmart employees will never see wages approaching the $175,000 per year top managers make. Many, however, will earn a viable living and have the opportunity to move up within the company's ranks.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.