CVS Health will raise the minimum wage of its employees to $15 an hour effective in July of next year as the drugstore chain’s business rebounds to pre-pandemic levels in a tight labor market.
The drugstore giant, which on Wednesday raised its profit forecast for the rest of this year, said the salary increase would impact more than 30% of its workforce. “Approximately 65% of employees earning hourly wages already make more than $15 an hour,” CVS said in a statement.
The announcement of a wage increase to tens of thousands of employees comes as traffic inside its nearly 10,000 retail locations rebounds from last year’s second quarter when shelter-in-place orders kept people in their homes as Covid-19 began its U.S. spread. CVS’ wage increase is also a competitive move given the labor market is tight in many parts of the U.S.
“Attracting and retaining top talent across our businesses is critical as we continue to redefine what it means to meet people’s health needs,” CVS Health chief executive Karen Lynch said. “These wage increases will have a meaningful impact on our colleagues and their families while helping the communities we serve prosper.”
CVS is beginning to see even brighter financial days ahead, raising its full year adjusted earnings per share guidance range to “$7.70 – $7.80 from $7.56 – $7.68.”
Revenue rose more than 11% to $72.6 billion in CVS’ second quarter ended June 30 as the company grows businesses in new and existing markets, Lynch told analysts on a call Wednesday morning to discuss earnings.
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In the second quarter of this year, CVS attributed growth to “increased prescription and front store volume, Covid-19 vaccinations and diagnostic testing.” In the second quarter, CVS administered “more than 6 million Covid-19 tests and nearly 17 million Covid-19 vaccines,” the company said.
CVS net income was down nearly 7% to nearly $2.8 billion compared to the year-ago period’s net income of nearly $3 billion. CVS, which owns the health insurance company Aetna, saw an unusually large amount of profits in the second quarter of last year like other health insurers when Americans delayed or put off medical care procedures and trips to the doctor’s office as Covid-19 spread and states ordered people to stay in their homes.