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CNN:

Walmart, America’s largest private employer, said Tuesday it would raise its minimum wage from $12 to $14 an hour as it tries to retain low-wage store and warehouse workers in the industry’s tight labor market.

Walmart has 1.7 million workers in the U.S., 94% of whom are hourly, according to its most recent annual securities filing. The company has hired hundreds of thousands of workers during the Covid-19 pandemic to meet high consumer demand for groceries and other goods.

In many parts of the country, especially southern states that have not passed higher wage laws, Walmart’s starting wage often serves as the local minimum wage. The company’s move is likely to have a ripple effect in the service industry.

Walmart has been the target of criticism from labor groups for decades for low pay, but it has raised wages in recent years. Its latest move will close the gap with Amazon ( AMZN ) , Target ( TGT ) , Costco ( COST ) and other rivals. Amazon ( AMZN ) and Target ( TGT ) have minimum wages of $15, while Costco ( COST ) starts at $17 an hour.

Walmart’s wage hike reflects pressure on chains to raise wages in the battle for labor. Walmart is trying to keep pace with competitors as well as cities and states that are raising their minimum wages. The federal minimum wage has been $7.25 an hour since 2009. Washington state has the highest minimum wage in the nation at $15.74.

While dozens of companies, including Walmart, have laid off corporate staff in recent months, demand for service workers remains strong. Walmart currently has about 30,000 store jobs listed on its hiring website.

The latest reading from the Labor Department put the number of job openings in November at 10.5 million, well above historical standards and well above the 6 million jobless claims that month. More than 1 million jobs were registered in the retail sector.

“The labor market remains competitive, especially at this level. Hourly workers are still hard to find, and companies continue to compete for them by raising wages.

Walmart U.S. Chief John Ferner said in a note Tuesday that the company’s wage increase “will ensure that we have attractive compensation in the markets we operate.”

The company’s move also comes as many low-wage workers need higher wages to combat rising costs of food, housing and other inflationary pressures.

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