Walmart CEO McMillon talks wages, worker education, and tariffs

Walmart CEO Doug McMillon on Friday (June 6) continued to push his message of wage and education support for the 2.1 million employees who run the stores, distribution centers and other operations at the Bentonville-based global retail giant.

“My best days at work are when we raise wages,” McMillon told the media following the retailer’s 55th annual event for shareholders and employees on Friday at Bud Walton Arena in Fayetteville. “What I have enjoyed most is giving back. We are going to keep increasing wages.”

McMillon said in the past 10 years, U.S. hourly wages are up by more than 90%, and the average wage is $18 per hour, up 28% over the past five years. He said between 2021 and 2026, Walmart spent $1 billion in skills training and degrees through the Walmart Academy and its Live Better U program. He said U.S. store and club managers’ starting pay last year was $249,000, and the highest performing managers earned more than $500,000.

He told the media that Walmart has to be careful how much it spends on benefits and education to ensure they are able to support wage increases. Walmart in 2015 began to prioritize pay raises for about 500,000 managers and raised its minimum wage, costing about $1.2 billion, as it also ramped up e-commerce spending.

Investors did not initially approve. The stock price took a hit after Walmart reduced its earnings guidance in the back half of that year. McMillon made his case to the investment community in October 2015, stating investments in people and technology were necessary for Walmart’s future and the financial return would take more than a fiscal quarter or two.

McMillon’s wage and benefit moves followed a troubling report in 2014 indicating that the retailer’s low wages resulted in an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing. The report was from the Americans for Tax Fairness, a coalition of 400 national and state-level progressive groups.

Walmart would spend another $1 billion toward wages and educational training for employees between 2021 to 2026.

The retailer, along with McDonald’s, Amazon, FedEx, Dollar Tree, and other large national corporations, is still criticized for having a large number of employees requiring public assistance. A 2020 study by the federal Government Accountability Office found 70% of food stamp and Medicaid users were full-time workers, with 90% of them in the private sector and many of those employed in restaurants and large retailers.

TARIFFS, SUPPLIER RELATIONS
McMillon said Walmart has not seen any changes in consumers shopping behaviors related to proposed and implemented tariffs by the Trump administration. He said purchases were consistent, with no stockpiling or hoarding like seen during the pandemic or a port strike. He expects changes in shopper behaviors to be gradual over time if prices do increase.

He said Walmart has been adjusting its supply chain for years, about a decade, carefully evaluating buying goods here in the U.S. An important part of that work is when Walmart diversifies to try and mitigate risk. McMillon said that is the strategy that makes the most sense.

When asked if Walmart was pressuring suppliers in China to hold prices down, McMillon said the company’s approach to working with suppliers has not changed.

“We want the people that we work with to be here and be successful a year from now, five years from now, 10 years from now, because we plan on needing merchandise, so they have to make a profit, and we know that,” he said.

McMillon also said many companies that supply Walmart have higher margins than retailers.

“I’m not worried about them,” he said. “I think they’ll be fine, and that’s the way that we treat them.”