WALMART BOOST MINIMUM WAGE AGAIN AND HANDS OUT 1,OOO BONUSES
Walmart is boosting the minimum hourly wage for its U.S. employees to $11 and dishing out bonuses of up to $1,000, crediting President Trump's tax cut for enabling the move. The increase for the nation's largest private employer also comes amid political pressure to bolster minimum wages and comes amid a hot streak for the retailer. The big-box store chain, which has more than 1 million U.S. hourly employees, will reap a windfall from the U.S. corporate tax rate cut to 21%, down from 35%. “Today, we are building on investments we’ve been making in associates, in their wages and skills development,” Walmart CEO Doug McMillon said in a statement. “It’s our people who make the difference and we appreciate how they work hard to make every day easier for busy families.” The move also comes amid a 17-year low for the U.S. unemployment rate, which has intensified competition for workers.
At the same time, Walmart confirmed Thursday that it is closing about 50 Sam's Club stores and converting another dozen or so into online fulfillment centers. Those closures suggest that the retail landscape remains extremely challenging for certain brands. Walmart's wage-boost announcement follows a series of similar moves by major corporations that also credited the tax cut with bolstering their businesses. For example, AT&T and Comcast dished out one-time bonuses of $1,000 to non-management workers, and Wells Fargo and Fifth Third Bancorp boosted base hourly pay to $15. Economists have argued that one-time bonuses, while significant for workers living paycheck to paycheck, are not as meaningful as permanent wage increases. Critics of tax reform have said companies are dishing out bonuses for the sake of good publicity and to curry favor with the White House.
"Walmart would have had to go to at least $11 in many markets in order to retain reliable employees," University of Michigan business professor Erik Gordon said. "The tax cut made it easier for the company to swallow." But, Gordon said, the move indicates that "the corporate tax cut's touted trickle-down effects that were met with skepticism by critics may be happening." Charles Fishman, author of The Wal-Mart Effect, said the move shows that the retailer is betting on solid economic growth for the next two to three years. It also reflected a recognition that Walmart needed to "up its game to keep its employees and get new employees," he said. "They’ve started to change the way they treat employees because they can’t take them for granted anymore," Fishman said. Walmart's wage increase will take effect in February. The company said the one-time bonuses would cost the company $400 million and will be based on length of service. Employees who have worked for at least 20 years will get the full $1,000, but most will get up to a few hundred dollars. The company is also boosting its paid maternity leave policy for full-time hourly workers to 10 weeks at full pay. Previously, mothers got six to eight weeks at half pay. Walmart is also increasing its paid leave policy for new fathers, non-birthing mothers, adoptive parents and foster parents to six weeks at full pay for full-time hourly workers. Previously, the company didn't offer paid leave for them. The changes in parental leave put salaried and hourly workers on the same footing. Walmart also said it would offer financial help to full-time hourly and salaried employees who are seeking to adopt children. The minimum wage increase comes about a year after Walmart hiked hourly pay to at least $10 for most workers. Twelve states already have minimum wages of at least $10, according to the Economic Policy Institute. The wage increase comes as Walmart is on a roll. While many traditional retailers have been struggling to keep up with online behemoth Amazon, Walmart has fared better. Walmart's online business is surging.