Apple raises worker wage budget amid tight labor market

Apple Inc. is raising workers’ wages amid rising inflation, a tight labor market and a surge in unionization among hourly store workers.

The iPhone maker told employees in an email Wednesday that the company was increasing its overall compensation budget. Starting wages for hourly workers in the United States will increase to $22 per hour, or more depending on the market, a 45% increase from 2018. Starting wages in the United States are also expected to rise.

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“Supporting and retaining the best team members in the world enables us to provide the best and most innovative products and services to our customers,” an Apple spokesperson said in a statement. “This year, as part of our annual performance review process, we are increasing our overall compensation budget.”

Apple’s plans are just the latest from companies battling to retain talent. Microsoft Corp. told workers this month that the company would nearly double its overall budget for merit-based pay increases.

Apple

An Apple logo hangs above the entrance to the Apple Store on 5th Avenue in the Manhattan borough of New York City. (REUTERS/Mike Segar/File Photo/Reuters Photos)

In recent months, Apple has faced unusual social unrest. That discontent has spread from frontline retail store workers campaigning for unionization to salaried engineers unhappy with the company’s plans to return to the office.

Some workers, including hourly employees at its stores and AppleCare, were told their annual reviews would be brought forward by three months and their pay increases would take effect in early July, according to a memo reviewed by The Wall Street Journal. The normal review process coincides with Apple’s fiscal year end in the fall.

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These workers were told that the increase in the company’s compensation budget would be in addition to salary increases and special awards already received over the past year.

Faced with a war for talent, tech companies have also seen their main compensation tools – stock awards – hampered by falling company valuations. Apple shares have fallen 21% this year through Wednesday’s close.

Tim Cook

Apple CEO Tim Cook (Getty Images/Getty Images)

This decline knocked Apple off its perch as the world’s most valuable publicly traded company.

The tech giant has seen incredible growth over the past two years. Sales of iPhones, laptops and tablets to workers and students quarantined at home during the pandemic helped fuel Apple’s record profits.

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The company had taken steps to improve its compensation plan, including special cash bonuses and money for household equipment.

The Labor Department said last month that U.S. business and government employers spent 4.5% more on labor costs in the first three months of the year, the fastest rise since 2001 and exceeding the 4.0% annual growth of the fourth quarter. However, those dollars don’t go far if inflation is taken into account. Adjusted for inflation, private sector wages and salaries declined over the period.

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Apple last week suspended plans to call salaried workers back to the office for at least three days a week as Covid-19 cases surged in California. The company was one of the first to send workers home in early 2020 as the pandemic spread around the world and was a high-profile example of the challenges of getting workers back to the office as coronavirus variants are erupting and some workers are pushing for greater flexibility to continue working remotely.

The pandemic era has also seen new pressure from workers to unionize at bold companies including Amazon.com Inc. and Starbucks Corp. Retail workers at various Apple stores across the United States, including New York, are trying to mobilize their own efforts.

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Last year, Apple’s median compensation was $68,254, according to a regulatory filing. Managing Director Tim Cook received nearly $100 million; he said he planned to donate most of his wealth to philanthropic causes.

Write to Tim Higgins at Tim.Higgins@WSJ.com

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