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Sam’s Club, the membership-only warehouse club retail store owned by Walmart, is set to increase its minimum wage and give staff a pay bump to tackle an ongoing retention problem.
Starting in November, the minimum wage for the company’s lowest-paid staff will move from $15 per hour to $16 per hour, a report by CNN reveals.
Meanwhile, the company’s existing 100,000 employees will see a 3% to 6% increase in their wages corresponding to their tenure.
Why is Sam’s Club raising pay?
As a pay-to-play (or pay-to-shop) retailer, shoppers at Sam’s Club expect a higher quality of customer service than at your average store. Accordingly, it needs a steady stream of high-quality retail and warehousing talent capable of delivering a premium customer service experience.
But the store chain currently has its work cut out, with competitors like Costco offering higher minimum wages. Speaking to CNN, Sam’s Club CEO Chris Nicholas stated his hope that the pay raise can be a marker for the company to encourage employees to stay for a long tenure, rather than jump ship to competitors.
“The thing that we’re trying to do here is create good jobs that turn into great careers,” he explained. “Stability matters more for a club model than anywhere else.”
The pay raises come as part of a new plan for wage growth at Sam’s Club. Hourly employees were previously able to earn a raise of 3% a year until they reached their pay ceiling, which could theoretically max out at $36 an hour.
The new plan rewards those who stay at Sam’s Club for longer, with those employees eligible for raises of up to 6% per year until they hit their maximum rate, and once this has been hit, could still get an additional 6% lump-sum bonus.
Attracting and retaining talent is a critical task for Sam’s Club currently as it looks to take advantage of a booming market for warehouse clubs as customers increasingly seek out bulk discounts. “Because we’re growing so much, we just need more people,” Nicholas explained.
Sam’s Club has been on a journey to improve the quality of the employee experience since 2019, including moves to begin offering annual stock grants and to address employee scheduling complaints.
How does Sam’s Club pay compare to the industry?
Even with the raise from $15 to $16 per hour, the minimum wage for Sam’s Club staff still falls a fair way below Costco, which leads the market with a minimum of $19.50 per hour.
Other chains have also recently increased minimum wages. Average hourly wages for retail employees now sit at $24.48 per hour, up 16% from April 2020 ($21.18 per hour).
Daniel Schneider, a sociologist at Harvard University and service industry work expert, told CNN Sam’s Club is the latest in a trend of companies adopting voluntary wage standards as they attempt to fix retention issues.
“That reflects the realization that these firms need to reduce turnover to manageable levels,” he stated. “Meaningful guaranteed annual raises that rise with tenure would be a big change and positive for workers.”
Schneider added that Costco has been a market leader with its pay in the retail industry, giving it a competitive advantage in the talent market over other employers like Sam’s Club. The company’s consistent wage growth, he argued, has employees to stay at the company for a longer tenure rather than defecting to competitors.
But despite minimum wage increases across the industry, including at employers like CostCo and Sam’s Club, many employees (including retail workers) have argued that their pay packet is still insufficient to meet their cost of living.
