Last month we learned that Kroger has been texting and emailing former employees who had quit their jobs to ask them to come on back. Now the supermarket giant says it will spend $770 million more this year to raise hourly wages and improve health-care benefits for its workers.
Kroger made the announcement Thursday after surprising Wall Street with strong fourth-quarter results, partly a result of streamlining its supply chain to reduce costs.
Kroger isn’t the only retailer upping wages and benefits. Faced with the lowest unemployment rate in more than 50 years, Walmart, Home Depot, and others are also paying workers more.
The pay boosts are part of the “labor hoarding" trend, in which companies, afraid they’ll be unable to fill positions if workers leave, try harder to keep them.
And companies have reasons to be fearful. The latest jobs report showed the retail sector adding about 30,000 jobs in January. Nonfarm payrolls overall increased by 517,000, crushing the market estimate of 187,000, and wages posted solid gains as well. The leisure and hospitality sector alone added 128,000 jobs.
In other words, workers stocking shelves or helping customers in a Kroger or Home Depot have plenty of options if they decide to leave—and companies know it.
Home Depot said last month it’s spending $1 billion on wage increases for workers in North America. Walmart, the nation’s largest private employer, said in January it would raise its minimum wage for store employees from $12 to $14 an hour.
Of course, fears of a looming recession remain; interest rates and credit card debt in the U.S. are rising while savings dwindle amid high inflation; and many Americans are struggling to make their car payments. Headlines about mass layoffs at big-name firms, meanwhile, have been inescapable in recent months.
Those layoffs, however, have often been concentrated in the tech industry, where many companies over-hired to meet surging demand for their products and services during the pandemic. In January Amazon began firing 18,000 people, Microsoft let go of 10,000, and Google parent Alphabet slashed 12,000 jobs.
More broadly, “We are still in a jobs market where labor demand far outpaces supply, with 3 million fewer workers than before the pandemic,” Becky Frankiewicz, president of ManpowerGroup, the world’s third-largest staffing firm, told Fortune last month. “Pandemic paranoia has set in with employers who remember how hard it was to bring back workers.”
