Walmart is positioning its latest wage increase as a response to tax reform passed late previous year that could provide the retailer with a windfall to share, thanks to a significant reduction in the corporate tax rate.
The big-box giant said Thursday it will raise its minimum wage in February to $11 per hour and pledged to give one-time bonuses to eligible employees of between $200 and $1,000.
The Republican plan cuts the corporate tax rate from 35 percent to 21 percent.
"Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the USA", the company's CEO Doug McMillon said in a statement. Wal-Mart also said it will spend another $400 million in the current year ending January 31 on one-time bonuses ranging from $200 to $1,000 based on length of service.
The pay increase, Walmart's third minimum wage increase since 2015, and bonus will benefit more than 1 million US hourly workers, it said.
Walmart said hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters, will benefit from the wage increase.
Beginning Feb. 17th, Walmart will increase its starting wage rate to $11 an hour.
The retail chain employs about 2.1 million people worldwide - an estimated 1.4 million of which are in the U.S - which means an average bonus works out to be about $190. The amount will be based on length of service. The payout will cost Walmart a total of $400 million dollars. (While President Trump hasn't yet tweeted to crow about the move, past experience suggests it may only be a matter of time.) But taxes are hardly the whole story.
Walmart says it is raising hourly pay to $11 from $9 as a result of the new U.S. tax law. The Economic Policy Institute estimates that an inflation-adjusted minimum wage would be $11.62 in 2017, although Tsedeye Gebreselassie, senior staff attorney at the National Employment Law Project, said this doesn't take productivity gains into account.
Wal-Mart Stores Inc. is boosting its starting hourly wage to $11 and delivering bonuses to employees, capitalizing on the USA tax overhaul to stay competitive in a tightening labor market.
Several other institutional investors and hedge funds have also made changes to their positions in the company. Wal-Mart has also expanded paid maternity leave to 10 weeks and six weeks of parental leave for full-time hourly associates. Large employers also have been under pressure to boost benefits for workers because unemployment rates are at historic lows, allowing job seekers to be pickier.
Wage increases at the lower end of the scale are typically a sign that labor markets are tight, said Elise Gould, a senior economist at the Economic Policy Institute.
Walmart raised its minimum wage to $9 an hour in 2015.
Even with the wage bump, many workers will struggle if they're the sole breadwinner.
"I would've been astounded if they hadn't raised wages", said Thomas Kochan, at professor at MIT's Sloan School of Management.