Walgreens becomes newest member of the $15 an hour club
Walgreens will start paying employees at least $15 an hour starting in October, becoming the latest major company to boost wages in a fiercely competitive job market.
About half of Walgreens' 190,000 employees already make at least $15 an hour and will not see their pay increased. The remaining half will see their pay boosted, the company said. The $15 increase, which applies to both full- and part-time workers, will be phased in and completed by November 2022.
Walgreens' pay raise comes amid a shortage of workers in some industries as millions of Americans quit their jobs in search of higher wages or a better work-life balance. A U.S. Department of Labor survey estimated that 3.6 million people quit their job in June. The "Great Resignation" — as the phenomenon has been dubbed — is leaving millions of jobs unfilled and hiring managers scrambling to find workers.
Paying $15 an hour is a way to entice employees to stay at Walgreens or to attract job candidates, according to CEO Roz Brewer. "Investing in and rewarding our team members is not only the right thing to do, it's highly important to retaining and attracting a talented workforce," she said in a statement.
The pay hike will cost Walgreens, the nation's second-largest drugstore chain behind CVS, roughly $450 million over the next three years. Walgreens said it expects to absorb the added costs "through the normal course of business."
Shares of Walgreens Boots Alliance rose 4% in Tuesday afternoon trading to roughly $50.50 a share.
Walgreens joins a number of other companies promising to raise their minimum wage to at least $15 per hour — including Chipotle, Southwest Airlines, Under Armour and Wayfair. CVS Health, a Walgreens competitor, said earlier this month that it would raise its baseline wage to $15 starting next July.
Companies are embracing $15 an hour as labor unions and worker advocates push Congress and the Biden administration to increase the federal minimum wage to that level. Economists estimated that $15 an hour would lift more than 1 million workers out of poverty. A Congressional Budget Office estimate said the move would reduce poverty but could also reduce jobs.
The federal minimum wage, which now stands at $7.25 an hour, was last raised in 2009. More than 20 states around the U.S. have lifted, or committed to raising, their hourly wage floor to $15.