When Wal-Mart Stores Inc. chief Doug McMillon announced plans toboost store workers' minimum wage earlier this year, he said themove was intended to improve morale and retain employees.

Yet for some of the hundreds of thousands of workers getting noraise, the policy is having the opposite effect.

In interviews and in hundreds of comments on Facebook, Wal- Martemployees are calling the move unfair to senior workers who got noincrease and now make the same or close to what newer, lessexperienced colleagues earn. New workers started making a minimumof $9 an hour in April and will get at least $10 an hour inFebruary.

“It is pitting people against each other,” said CharmaineGivens-Thomas, a 10-year veteran who makes $12 an hour at a storenear Chicago and belongs to OUR Walmart, a union-backed group thathas lobbied for better working conditions. “It hurts morale whenpeople feel like they aren't being appreciated. I hear people everyday talking about looking for other jobs and wanting to removethemselves from Wal-Mart and a job that will make them feel likethat.”

Some workers also said they suspect their hours are being cutand annual raises reduced to cover the cost of the wage increasefor newer workers. Wal-Mart denies that and says it's taking stepsto ensure all employees have an opportunity to move intohigher-paying jobs. Along with bumping up the minimum wage, itincreased the amount workers receive when promoted, boosted pay forsome managers and raised the maximum pay for all hourlypositions.

Several U.S. retailers have raised the minimum wage for theirworkers in recent months, among them Gap Inc., TJX Cos. and TargetCorp. The moves were widely hailed amid calls to combat wageinequality — an issue that even reached the U.S. Securities andExchange Commission, which on Wednesday voted to force companies toreveal the pay gap between the chief executive officer and theirtypical worker.

However, if Wal-Mart and other retailers don't also adjust payfor veteran hourly workers, they could face rising dissent, saidDavid Cooper, an economic analyst at the Economic Policy Institute.Typically, when employers boost their base pay, they also giveraises to those making within $1 to $2 of the new minimum topreserve a type of wage hierarchy and keep their longer-timeworkers happy, studies show.

“Companies want to preserve some type of internal wage ladder,so to do that they have to adjust wages of folks above the newminimum,” Cooper said. If Wal-Mart doesn't raise wages for theseworkers, “folks are going to leave or start complaining morevocally,” he said.

Feeling Disenfranchised

Executives knew the minimum wage hike would make those left outfeel disenfranchised, said Kristin Oliver, Wal-Mart's U.S. humanresources chief. Since then, the company has been hearing fromupset employees and understands that the new wage policy could leadto increased turnover, she said.

In an attempt to retain workers who didn't get a raise, Wal-Marthas changed its scheduling system to help workers get the hoursthey want and started a new training program for employees lookingto advance within the company.

“We are constantly looking and evolving what the right payshould be and we were aware of the issue,” Oliver said. “We weren'tprepared to go forward with any additional increases but havecontinued to look at it to see if there is something else we shoulddo for those in the middle.”

Giving additional raises to employees already making close tothe new minimum wage would cost Wal-Mart about $400 million, saidJeannette Wicks-Lim, an assistant research professor at theUniversity of Massachusetts, Amherst. She based her calculation onraises the retail industry has handed out after past increases tostate and federal minimum wages. Wal-Mart declined to comment onher calculation.

Raising wages for veteran hourly workers could put furtherstrain on profits, which Wal-Mart said last quarter were draggeddown by the $1 billion it's already spending on raises. Last year,the Bentonville, Arkansas-based chain generated $486 billion inannual sales and a profit of about $16 billion.

Wal-Mart has said about 500,000 of its 1.3 million U.S.employees are getting raises and all employees will be able tobenefit from the new scheduling and training programs.

“We are trying to create a situation where they have a path tohigher paying positions over time,” Oliver said.

Still, that hasn't been the takeaway for many workers.

Sal Fuentes, who makes $13 an hour operating a forkliftovernights at a Wal-Mart in Duarte, California, said he expects thecompany to give out lower raises to him and other senior employeesto compensate for the cost of raising pay for the neweremployees.

Talent Competition

“There is always some way they get the money back,” saidFuentes, who has worked at the company since 2006 and is a memberof OUR Walmart. “They give you some but they are taking awaysomething else. It has always been like that.”

While employers may think raising wages will help them competefor talent, research shows workers care more about how much acolleague is making than someone at another company.

“Workers appear to pay attention to peer wages,” said LauraGiuliano, an associate professor of economics at the University ofMiami who has studied the issue. “Even a small difference canmatter, and whether or not it is going to matter may well depend onwhether it appears arbitrary or unfair.”

Givens-Thomas said she was happy to see her colleagues getting araise and thinks it's a sign Wal-Mart is moving in the rightdirection. Still, she said the new wage policy is bittersweet;Givens-Thomas recently moved in with her mother because shecouldn't afford her rent.

“I am impressed that they are even trying to raise the wages — Iknow it has been hard for them,” she said. “I would like tocontinue to see pay go up because it has been stagnant for so manyyears and people are really suffering.”

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