A customer enters a Home Depot store on August 16, 2022 in San Rafael, California.
Justin Sullivan | Getty Images
Home Depot said Tuesday that it will spend an additional $1 billion to give its hourly workers a pay raise as retailers and restaurants compete for workers.
The home accessories retailer announced the wage investment as stated fourth quarter earnings. It did not disclose the new average wage for employees, but said the starting wage in each market is at least $15 an hour.
Hourly workers will see the raise, which took effect Feb. 6, in their paychecks this month. This increase will increase wages for all hourly workers in the US and Canada.
The move makes Home Depot the latest major retailer to signal that the labor market is still tight — especially for lower-wage hourly workers. Over labor marketthe data is still going strong: The unemployment fell to 3.5 percent Nonfarm payrolls grew better than expected in December, according to the latest data available from the US Bureau of Labor Statistics.
Several well-known technology companies and banks, including Google, Amazon and Goldman Sachshave laid off thousands of employees. But so far, retailers, restaurants and hospitality have largely bucked the trend — and have even announced plans to hire or raise wages.
Walmart, the nation’s largest private employer, recently made the announcement raise the minimum wage to $14 an hour for store employees and have a U.S. average hourly wage of more than $17.50 as of early March. Chipotle Mexican Grill he said that wants to hire 15,000 restaurant workers before the busy spring season.
The companies have created these plans, despite industry watchers’ expectations of slower revenue growth next year. Companies list labor costs among the things that add to their budgets. But they also feel the pressure to raise their salaries, as the prices of food, rent and other essentials are rising.
Home Depot is one of the nation’s largest private employers, with approximately 475,000 employees. The vast majority of its employees are hourly workers at its approximately 2,300 stores in the US, Canada and Mexico. Front-line employees who will receive pay increases also work in supply chain, customer care and merchandising roles.
In an email to employees shared with CNBC, Home Depot CEO Ted Decker said the investment “puts us in a better position in every market we operate in.” He said the higher wages will improve the customer experience because the company will attract more high-quality workers and retain experienced employees.
“This investment will help us attract and retain the best talent in our pipeline,” he said.
Home Depot has also added more training opportunities, he said, including promoting more than 65,000 employees in 2022 alone.