Home Depot says it will spend $1 billion to give hourly workers a raise

Home Depot says it will spend $1 billion to give hourly workers a raise

A customer enters a Home Depot store on August 16, 2022 in San Rafael, California.

Justin Sullivan | Getty Images

Home Depot on Tuesday said it will spend an additional $1 billion to give its hourly employees a raise, as retailers and restaurants compete for workers.

The home improvement retailer announced the wage investment as it reported fourth-quarter earnings. It did not disclose the new average wage for employees, but said every market’s starting wage is at least $15 an hour.

Hourly workers will see the increase, which went into effect on Feb. 6, this month in their paychecks. The increase will boost pay for all hourly workers in the U.S. and Canada.

With the move, Home Depot becomes the latest major retailer to signal that the labor market is still tight — especially when it comes to lower-wage hourly workers. Across the jobs market, the data is still strong: The unemployment rate fell to 3.5% in and nonfarm payroll growth was better than expected in December, the most recently available data from the U.S. Bureau of Labor Statistics.

Several big-name tech companies and banks, including GoogleAmazon and Goldman Sachs, have laid off thousands of employees. So far, however, retailers, restaurants and the hospitality industry has largely bucked the trend — and even announced plans to hire or boost pay.

Walmart, the nation’s largest private employer, recently announced it would raise its minimum wage to $14 an hour for store employees and have an an average U.S. hourly wage of more than $17.50, as of early March. Chipotle Mexican Grill said it wants to hire 15,000 restaurant workers ahead of its busy spring season.

The companies have made those plans, despite industry-watchers’ expectations for slower sales growth in the year ahead. Companies have cited labor costs among the things driving up their budgets. But they also feel pressure to increase pay as prices rise for groceries, rent and other essentials.

Home Depot is one of the country’s largest private employers with about 475,000 workers. The vast majority of its employees are hourly workers at its approximately 2,300 stores in the U.S., Canada and Mexico. Its frontline employees, who will receive the wage increases, also work in supply chain, customer care and merchandising roles.

In an email to employees that was shared with CNBC, Home Depot CEO Ted Decker said the investment “positions us more favorably in every market where we operate.” He said higher wages will improve the customer experience as the company attracts more high-quality workers and keep experienced staff.

“This investment will help us attract and retain the best talent into our pipeline,” he said.

Home Depot has added more training opportunities, too, he said, including the promotion of more than 65,000 employees in 2022 alone.

(With inputs from CNBC)