Kroger is the latest retailer to spend big on employee wages as the job market tightens
- Kroger is spending $770 million more this year on wages and benefits for workers.
- It's funding the increase with cost savings, in part from the use of technology, its CFO said.
Kroger is latest retailer to say it will spend more this year on worker wages as companies fight to keep employees in a tight labor market.
The grocery chain will spend $770 million more on employee pay and benefits in 2023, it said after reporting earnings on Thursday. Kroger's previous investments in compensation since 2018 raised the average starting rate at the company to $18 an hour.
The wage increases will be funded by cost savings, such as the increased use of technology to improve productivity in stores and "eliminating waste in areas that did not affect the customer experience," CFO Gary Millerchip said during a call to discuss the company's fourth-quarter results.
Those savings are expected to total $1 billion in 2023, marking the sixth consecutive year that Kroger has decreased costs by that amount, Millerchip said.
Kroger operates stores under 19 different names, including Ralph's in Southern California and Mariano's in Chicago.
The Ohio-based grocer follows companies like Home Depot and Walmart in committing to raise wages this year. In February, Home Depot said it would up spending on wages by $1 billion and raise its minimum hourly rate to $15 across the US. Walmart said in January that it would increase its minimum wage to $14 from the previous $12-an-hour rate.
The higher pay is part of "labor hoarding," or companies trying to keep workers for fear of not being able to fill positions if they leave.
Despite predictions of a recession in the US, the retail industry had the second-highest number of job openings of any sector at the end of 2022, federal data shows. US Unemployment rates have also remained historically low.
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