Home Depot announced on Tuesday that it will invest $1 billion in pay increases and benefits for its front line hourly staff, a sign of the tightening labor market and rising wages in the U.S. economy. The company is also giving its shareholders a 10% dividend increase, or about $780 million, and will use excess cash to increase share repurchases, though it did not set a target on how much it would spend on those purchases.
Home Depot employs a total of 491,000 people worldwide, with 437,000 of those being hourly workers in the United States. The company had to hire an additional 200,000 workers due to turnover and seasonal staffing needs during the fiscal year. The company also said it is creating new management positions on the store floors and increasing wages for every single front-line worker, both starting pay and more senior workers, to improve retention.
The company did not specify how much of a raise the average hourly worker would receive, but noted that it pays at least $15 an hour as a starting wage in every market, with many markets paying a higher starting wage. CEO Edward Decker said that the investment in wages and benefits is to improve customer experience, since “if we take care of our associates, they take care of the customer and everything takes care of itself.”
The company also said that it is not taking a hit from the weakness in the home sale market resulting from higher mortgage rates, as CFO Richard McPhail noted that “the incentive is really there to improve in place” since over 90% of U.S. homeowners have fixed rate mortgages under 5%.
The report caused Home Depot's shares to drop by 4% in premarket trading.
0. “Home Depot to spend $1 billion more on hourly workers” WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale, 21 Feb. 2023, https://wsvn.com/news/us-world/home-depot-to-spend-1-billion-more-on-hourly-workers/
1. “Home Depot says it will raise pay for U.S., Canadian workers” Toledo Blade, 21 Feb. 2023, https://www.toledoblade.com/business/labor/2023/02/21/home-depot-says-it-will-raise-pay-for-u-s-canadian-workers/stories/20230221077
2. “Home Depot to spend $1 billion more on hourly workers” erienewsnow.com, 21 Feb. 2023, https://www.erienewsnow.com/story/48417979/home-depot-to-spend-1-billion-more-on-hourly-workers
3. “Home Depot to spend $1 billion more on hourly workers” LocalNews8.com, 21 Feb. 2023, https://localnews8.com/money/cnn-business-consumer/2023/02/21/home-depot-to-spend-1-billion-more-on-hourly-workers