After Trump Tax Cuts, Walmart Raises Wages, Gives Bonuses, Helps with Adoptions

Treasury Secretary Steven Mnuchin.   David McNew  Getty Images

The starting wage rate increase, which is in addition to wage hikes already slated for many USA markets this coming fiscal year, applies to all US hourly associates, including those who work in stores, Sam's Clubs, the ecommerce division, logistics and the company's home office.

First, Walmart employees are eligible for the $1,000 bonus only if they've worked at the company for 20 years.

Donald Trump and his fellow Republicans have argued that the big corporate tax cut will benefit workers and lead to more investment by U.S. companies. Salaried employees, who already had 10 weeks paid maternity leave, will receive more paid parental leave. Full-time hourly and salaried associates will also be eligible for adoption benefits of up to $5,000 per child.

Wal-Mart's hike follows Target's October decision to increase its minimum hourly wage to $11, which it will further boost to $15 by the end of 2020.

"Retailers have traditionally paid one of the highest effective corporate tax rates", Sandy Kennedy, the president of the Retail Industry Leaders Association, said last month.

McMillon said Walmart is in the "early" stages of assessing opportunities from the GOP tax plan, adding "tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S".

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"Wal-Mart would have had to go to at least $11 in many markets in order to retain reliable employees", said University of MI business professor Erik Gordon. Walmart said the one-time bonuses would cost the company $400 million and will be based on length of service.

Taking effect next month, the wage hike will be about $300 million incremental to what was already included in next fiscal year's plan. Full-time hourly workers in the United States will get 10 weeks of paid maternity leave and six weeks of paid parental leave. That helped spur the long stretch of steady comparable sales growth it has enjoyed recently: When it invested in better pay and more training for workers, that translated into better-stocked shelves and friendlier customer service.

Parental leave has been another area in which retailers including Target and Ikea have been trying to offer better benefits. It made a similarly splashy announcement back in 2015 about raising its minimum hourly pay amid improving economic conditions.

The wage increase comes as Walmart is on a roll.

The company will also expand hourly leave, "providing full-time hourly associates in the US with 10 weeks of paid maternity leave and six weeks of paid parental leave", it says. The federal minimum wage is $7.25. Walmart's online business is surging. It has done well and strengthened its hand in online retail as many other retailers have struggled.

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