Ten years ago, Walmart was under pressure. Worker turnover was high, customer experience was slipping, and the company was getting hammered by labor activists. At the same time, Amazon was gaining ground and even Walmart insiders weren’t sure the retail giant could keep growing. The long-running plan of squeezing costs wasn’t delivering the sales momentum leadership needed.
A Turning Point in 2015
In early 2015, Walmart made a move few expected: it bumped starting pay to $9 an hour, well above the federal minimum of $7.25 at the time. Nearly half of its million-plus hourly workforce got raises. Wall Street hated it. The stock dropped 10% in a single day, wiping more than $21 billion in market value. Analysts saw it as a direct hit to earnings rather than a long-term play.
Doug McMillon, who had just stepped in as CEO, saw the wage move as part of a broader fix. He’d been hearing the same feedback from frontline workers: low pay, chaotic scheduling, cluttered stores, and slow promotions were killing morale and performance. If Walmart wanted better service, cleaner stores, and a shot at real e-commerce growth, it needed people to stay not churn.
The Strategy Behind the Pay Hike
McMillon brought in a new leadership team and made the case internally: higher wages and better training would cut turnover, boost store operations, and support Walmart’s push into online retail. The board agreed — and told him to accelerate the plan.
The company said it would spend $2.7 billion over two years to fund raises, improve stores and lower prices. At a 2015 investor event, the CFO warned that earnings per share could drop up to 12% the following year because of the investments. The market responded by dumping the stock. Executives left the stage mid-presentation to regroup.
Even Jim Cramer lit into the company for not warning investors sooner. McMillon ended up back on CNBC that day just to stop the bleeding.
The Long-Term Payoff
Fast forward: the call paid off. Walmart’s U.S. sales have increased every year since 2015. The company generated $681 billion in global revenue last year. Its stock has more than doubled in five years. With 1.5 million hourly workers in the U.S. today up from about one million when the raises began — average pay now tops $18 an hour.
What started as a controversy is now a business school case study. Harvard Business School is publishing the turnaround as an example of how investing in employees can translate into stronger growth. Executives from companies like Blackstone and Bank of America recently visited Walmart’s Bentonville headquarters to see exactly how the strategy unfolded.
A Blueprint Other Employers Watched
Once Walmart moved, rivals followed. Target, TJX and other major retailers bumped wages shortly after the 2015 announcement. Even President Obama called McMillon at the time to applaud the decision.
Internally, Walmart also changed how it measures success. Before 2015, executive cash bonuses were tied mostly to operating profit. After the shift, sales growth became part of the scorecard — a key signal of the company’s pivot.
Walmart continued gradually raising wages over the years: a minimum of $11 an hour in 2018, expanded paid family leave, and later $15 starting wages at competitors like Amazon and Costco. Walmart also set up regional training academies so frontline workers could move into higher-paying roles.
Turnover dropped by double digits. Managers like Rissa Pittman, who started as a cashier in 2003 and now oversees 30,000 employees in the Pacific Northwest, said hiring and developing talent got easier once wages began to rise.
The Next Phase: Automation, AI and Retention
Even with automation reshaping stores and warehouses, Walmart is trying to reduce churn instead of slash headcount. The company now has 2.1 million employees worldwide and expects staffing levels to stay about the same even as revenue climbs. Some new workers start at $14 to help manage labor costs, but leadership says retention perks like paid leave, bonuses and career paths are central to the model.
McMillon sums it up this way: wages matter, but they’re just one lever. The entire system — training, scheduling, store standards and tech has to work together.
From Backlash to Benchmark
What spooked investors in 2015 is now sold in classrooms as a case study in workforce strategy. Harvard professors say the Walmart story gives future leaders a data-driven look at how investments in front-line workers can shift an entire company’s trajectory even when Wall Street initially punishes the move.
In short: Walmart didn’t become generous it became strategic. And long-term investors who stuck around got rewarded for it.
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