updated 8/14/2006 6:07:04 PM ET 2006-08-14T22:07:04

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 company ladder.

Moore’s wife Shannon senses an opportunity lost. Speaking for her husband because he is deaf, Mrs. Moore told The Associated Press 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, whom it calls associates. Wal-Mart says the policy brings the world’s largest retailer in line with other big retailers.

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 up into higher positions. A job in inventory control, she said, would net him 50 cents more an hour for longer hours and more responsibility.

New system was no surprise
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. Their aim is to keep the company competitive, encourage workers to move up and ensure consistency in what it pays for the same job in the same store.

Most big retailers have similar caps
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.

“Firms adjust their compensation packages all the time. The big reason that they might decide to lower the top of the range is that they decide that they’re not actually adding much value once you’ve been there for a long time,” Cappelli said.

A Wal-Mart memo obtained by The Associated Press last October said 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.

Wal-Mart’s spokesman John Simley said there was no link between that memo and the pay caps.

“To think we would get rid of long-term associates is ridiculous. Their value to us is very high. They add experience, they help develop new associates and they reinforce the culture,” Simley said.

Jeanette Stewart, 43, of Harrisonville, Mo., a 15-year Wal-Mart veteran in the layaway department, said she didn’t know if 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'

“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.”

Delora Lewis, 50, a Supercenter cashier in Ponca City, Okla., said she was told the cap for her pay grade is $12.92 an hour. She earns $15.82 after 14 years at Wal-Mart. “What’s my incentive now to do good in my annual performance review?” Lewis said.

But Joanne Thornhill, 52, agreed with Wal-Mart that the caps were an incentive to workers like herself to move up through the ranks.

“I do think it’s positive,” said Thornhill, who works in customer service in Lancaster, Calif., and makes $9.60 an hour after five years. She did not know what her cap was, only that she was below it.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.94%
$30K home equity loan FICO 5.19%
$75K home equity loan FICO 4.58%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.40%
13.40%
Cash Back Cards 17.92%
17.91%
Rewards Cards 17.12%
17.11%
Source: Bankrate.com