Walmart announces upped wages and expanded benefits, noting tax cuts. But it also closed a lot of Sam's Clubs | Arkansas Blog

Friday, January 12, 2018

Walmart announces upped wages and expanded benefits, noting tax cuts. But it also closed a lot of Sam's Clubs

Posted By on Fri, Jan 12, 2018 at 9:52 AM

click to enlarge MORE MONEY: Walmart increases wages and benefits citing tax cuts
  • MORE MONEY: Walmart increases wages and benefits citing tax cuts

Walmart, the Bentonville-based retail behemoth and nation's largest employer, announced today it would increase wages to $11 for starting employees, expand maternity and paternity leave and even hand out one-time $1,000 bonuses to certain veteran employees.

Doug McMillon, in the company's release, said the change came after "assessing the opportunities tax reform creates for us." The increased wages, which will go into effect in February, will total about $300 million and go into next year's budget. The bonuses will add approximately $400 million to this year's budget.

Business Insider is also reporting that 63 Sam's Club stores will or have closed. Employees have been laid off and, according to some reports, only learned when they showed up to locked doors and a notice of closure. Ten of the stores will be turned into ecommerce distribution centers and "employees of those stores will have the opportunity to reapply for positions at those locations," writes BI. None of the Sam's Club stores in Arkansas will close.


Even without the closures of the 63 stores, you should be wary of celebrating the wages as a clear sign that Walmart is now pushing for worker's rights or that the tax bill's massive cuts for big businesses actually trickle down to worker wages.

As Judd Legum, for ThinkProgess writes:

Target announced it was raising its minimum wage to $11 last September and pledged to establish a $15 minimum wage by 2020. Costco has had a minimum wage of $13.50 since 2016. Walmart itself announced similar $1 minimum wage increases in 2015 and 2016. Additionally, many states have increased their minimum wage above $10. California, for example, now has an $11 minimum wage.

It's hard to imagine Walmart staying competitive without the wage raise. Does that mean it would still come without the tax cuts? I can't say. But it's certainly a great PR move by Walmart to push tax cuts as the cause of a needed wage increase.

Especially because the benefit to Walmart's bottom line from the cuts will likely be a few billion dollars more than the cost to the company in increased wages over the next ten years. Again, from Legum:

In fiscal year 2017, Walmart had pre-tax profits of about $20.5 billion and paid an effective federal tax rate of around 30 percent. With a new corporate tax rate of 21 percent, the corporate tax cut is worth at least $1.85 billion to Walmart every year. Since this cut is permanent, the true benefits to Walmart will grow much larger over time. But it’s safe to say that, over 10 years, this corporate tax cut will be worth over $18 billion to Walmart.

Governor Hutchinson applauded the changes by Walmart, in an email statement.

“Walmart’s quick reaction to the new law is exactly the response we expected under the tax cut,” the Governor said. “I am proud that Arkansas’s largest corporate citizen is leading the way in putting more money in the pockets of its hard-working employees.”
Here are the bullet points on the expanded benefits for employees from the press release:

*A one-time bonus benefiting all eligible full and part-time hourly associates in the U.S. The amount of the bonus will be based on length of service, with associates with at least 20 years qualifying for $1,000. A discrete one-time charge will be taken in the fourth quarter of the current year to account for the bonus; qualification will be determined before the end of the month and payments will be paid as quickly as practical thereafter.

*An increase in Walmart’s starting wage rate to $11 an hour, effective in the Feb. 17, 2018, pay cycle. The change is in addition to wage increases already planned for many U.S. markets in the coming fiscal year. The increase applies to all hourly associates in the U.S., including stores, Sam’s Clubs, eCommerce, logistics and Home Office.

*An expanded parental and maternity leave policy, providing full-time hourly associates in the U.S. with 10 weeks of paid maternity leave and six weeks of paid parental leave. Salaried associates will also receive six weeks of paid parental leave.

*Walmart will provide financial assistance to associates adopting a child. The adoption benefit, available to both full-time hourly and salaried associates, will total $5,000 per child and may be used for expenses such as adoption agency fees, translation fees and legal or court costs.

And here's the expected Trump tweet.


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