Under Armour hiring ‘more easily’ with new $15 minimum wage: CEO
Retail giants Walmart (WMT) and Walgreens (WBA) announced wage hikes this week that will boost income for hundreds of thousands of U.S. employees — the latest sign that companies are responding to the pandemic labor shortage by coaxing people back to work with higher pay.
In a recent interview, Under Armour CEO Patrik Frisk attested to the hiring benefits of a wage increase.
Frisk, who raised the company's minimum wage to $15 per hour in May, said the move has helped Under Armour hire "more easily." Meanwhile, a simultaneous improvement to the company's benefits package has provided a "clear path" for potential careers with the company, he added.
The company experienced a major drop in sales last spring amid store closures in the early months of the pandemic, but quickly implemented a restructuring plan that helped it achieve earnings beats in recent quarters.
"Because we are doing better as a company, I felt together with the entire management team and the HR team that this was a moment in time where we could not just afford it but also it was just simply the right thing to do," he says.
"Our recruitment also benefited from that, because we were able to recruit more easily," he adds. "But it wasn't the first reason why — it's something that we've been working on for two years."
"We also looked more comprehensively at all of our benefits," he says. "Now they have a clear path also in terms of a career with Under Armour."
The U.S. economy added 235,000 jobs in August, a dramatic slowdown in hiring from nearly 1 million jobs added the prior month, according to a report released by the Bureau of Labor Statistics (BLS) on Friday. The unemployment rate fell to 5.2%.
Despite the sluggish job gains, hourly earnings for private sector employees rose in August for the fifth straight month. A pandemic labor shortage may be driving the pay increases, the BLS report found.
"Rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages," the report said.
The U.S. minimum wage stands at $7.25 — a level it reached after Congress imposed its most recent rate hike in 2009. A slew of states have passed laws that incrementally raise their minimum wage to $15, including New York, California, and Florida.
Liberal Democrats in Congress have sought to raise the nationwide minimum wage to $15 per hour but have faced opposition from some moderate Democrats and many Republicans.
The hike to $15 per hour at Under Armour amounted to a 50% increase from its prior minimum rate of $10 per hour. The move raised pay for more than 8,000 employees, who make up 90% of the company's warehouse and retail staff, the company said.
"It was a big move," Frisks says. "And very unexpected. It changed lives."
"When I'm out there, I'm talking to these young people very often," he adds. "They now had an opportunity to go from maybe two or three jobs to one job, they were now maybe able to get a car, lease payments, and then it can actually get to work right, which is tremendously important to them."
Frisk took over as Under Armour CEO at the outset of 2020, after the company's founder and then-CEO Kevin Plank stepped down to become executive chairman. Born in Sweden, Frisk has held numerous senior executive positions across the retail sector, including a decade at the Aldo Group, a global chain of shoe and accessory stores.
Speaking to Yahoo Finance, Frisk hailed the wage hike as a major shift from the company's typically slower approach to pay increases.
"We finally decided to stop being incremental and take the final step and make it all in one big go," he says.
"It's probably one of the proudest moments in my management career," he says.
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