Tyson Foods Inc. is increasing hourly pay for about 34,000 workers at its U.S. chicken plants to improve employee retention and recruitment, the company announced Friday.
"We're increasing pay to remain competitive in the labor markets where we operate and to retain the quality Team Members we need to keep running successfully," said Noel White, president of Tyson Foods' poultry business, in a news release. "We believe we have the best team in the chicken business and we want to keep it that way."
Bob Williams, senior vice president at Simmons First Investments Group, said the cost of increasing wages will cut into Tyson's bottom line.
"It's going to be expensive, there's no question about it," he said. "It'll take awhile for the earnings to recoup for this."
The average hourly pay for employees who remain on the job for more than a year will be $12, according to the release. The changes, which will raise pay for workers at 51 chicken plants, will take effect Nov. 1.
"It's a competitive enough environment that they were willing to write the check," Williams said. "They are investing in the long haul and clearly expect to see returns in employee retention."
Starting pay for about 40 plants will increase to $10 an hour. The starting rate at some of these plants had ranged from $8 to $9 an hour. The top pay for production workers in chicken-processing plants can exceed $16 an hour, according to the Tyson statement.
White said the company offers the highest paying entry-level jobs and pays more than most companies in the chicken business.
Tyson also is boosting the pay of people who already are making more than the starting wage. Maintenance and refrigeration workers at all 51 chicken plants will have their wages increased by varying amounts.
Top rates for some maintenance jobs will reach $23 an hour, and the highest pay of some refrigeration jobs will be $26 an hour.
About half of Tyson's employees in the chicken sector have worked with the company for five years or more. Almost 25 percent of them have been with the company for 20 years or more, according to the news release.
Tyson has about 97,000 employees in the country, according to the company's website.
Williams said Tyson is benefiting from a drop in oil prices, which has pushed down costs for the company.
"They might have thought it's the right time to make this step," he said.
The company's stock hit a 52-week high Friday, ending at $47.44.
"The market didn't punish them for the move," Williams said.
Business on 10/24/2015