A ceiling over their heads

Published 9:00 pm Monday, August 14, 2006

BENTONVILLE, Ark. – A dozen years into a Wal-Mart career, Brad Moore looked forward to earning more money based on his good annual performance reviews. That changed last week when the retailer announced chain-wide pay caps it says are intended to move people up the ladder.

Moore’s wife, Shannon, senses an opportunity lost. Speaking for her husband because he is deaf, Shannon Moore said that her husband, 38, had applied for a transfer to a better-paying job at another Wal-Mart. The new pay caps took effect first, meaning he would lose about a dollar an hour from the $16.72 he now earns.

“We’re upset because you think you’ve got a plan going, next year’s going to be a little bit better and you can start paying for things. And then you get this,” said Shannon, 33, a preschool deaf education teacher. “We feel like a door’s been slammed in our face.”

For the first time since Sam Walton founded Wal-Mart Stores Inc. in 1962, the company last week said it would limit what it pays its workers.

Moore, a father of two, is now capped out in his current job, too. The pay cap for the job he holds now – assistant produce manager at a Tulsa, Okla., Supercenter – is $15.54 an hour.

Wal-Mart, with 1.3 million U.S. employees, says it won’t cut pay for anyone now above the limits, but they won’t be eligible for raises, either. Capped out workers are eligible for a $400 bonus this year as compensation.

Shannon said the caps mean Brad will earn less if he changes jobs within his store, unless he moves into higher positions.

Workers quoted in this story who were critical were contacted through unions they had called to complain about the caps. Workers contacted through Wal-Mart headquarters were more positive and said the new system was no surprise because it is common at other companies.

Amy Harr, 29, a personnel manager at a Supercenter in Columbus, Ohio, said she was capped out at $19.84 an hour, above a $19.25 limit. A six-year Wal-Mart veteran, she looks forward to moving up.

“Not only does my hourly rate matter, there are a lot of other things I look at. There’s scheduling, I can take time off when I want. There is the 401(k), stock options, profit sharing. I like what I have,” she said.

Wal-Mart announced the caps Aug. 7 without disclosing specifics, saying details would help competitors. The company’s aim is to stay competitive, encourage workers to move up and ensure consistency in what it pays for the same job in the same store.

The Hay Group, a management consultancy that helped Wal-Mart make the change, said most big retailers already have similar caps. Management professor Peter Cappelli from the University of Pennsylvania’s Wharton School said caps are not unusual in retail and other sectors.

A Wal-Mart memo obtained by The Associated Press last October said the costs of wages, profit-sharing and retirement programs were rising in part because of increasing worker tenure.

“Given the impact of tenure on wages and benefits, the cost of an associate with 7 years of tenure is almost 55 percent more than the cost of an associate with 1 year of tenure, yet there is no difference in his or her productivity,” said the memo written by Susan Chambers, then executive vice president of benefits. Chambers is now head of personnel.

Jeanette Stewart, 43, of Harrisonville, Mo., a 15-year Wal-Mart veteran, said she didn’t know whether the $12.28 she makes per hour was too much for the company. Her husband William, 51, makes $8.60 after 10 years in the meat department.

“They want to move the long-timers out because we’re too expensive,” she said.

In El Paso, Texas, Supercenter produce department worker Ramiro Gonzalez said he was worried that he might be capped out. Gonzalez, 49, makes $11.18 an hour after six years at Wal-Mart.

“Everybody’s angry. Everybody,” Gonzalez said. “Especially the people who’ve been there 15, 20, 25 years. They’re almost certainly above the pay caps.”