Walmart, Citing Tax Cuts, Will Raise Starting Wages and Expand Benefits

Posted January 11, 2018 4:06 p.m. EST
Updated January 11, 2018 4:08 p.m. EST

Walmart, the nation’s largest private employer, said Thursday that it would raise its starting wages, give bonuses to some employees and vastly expand maternity- and parental-leave benefits for its army of more than 1 million hourly workers.

The retailer said it would use some of the money it expects to save under the recently passed tax bill to pay for the raises and enhanced benefits.

Walmart said it would increase its starting hourly wage to $11 from $9, and provide one-time cash bonuses of up $1,000 to hourly workers, depending on how long they had been with the company. The wage increase takes effect next month.

Enhancing the pay and benefits of its employees is a significant move for a company that has long been criticized for its low wages, unpredictable scheduling of workers and high health care costs.

Walmart, which employs 2.2 million people around the world and is considered a bellwether for compensation in low-wage industries. The increased pay brings Walmart in line with some of its rivals in the retail industry, including Target, which raised its base pay to $11 last fall.

Although Walmart linked the moves to the tax cuts, it faces increased competition for the most qualified workers as the labor market tightens.

The company is also trying to improve customer service in its roughly 4,700 stores around the United States, many of which have shown signs of low employee morale and untidiness.

The higher wages could also help Walmart burnish its public image as it battles Amazon for online sales, analysts said.

“Amazon has been viewed as a good citizen,'’ said Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm. “Walmart has been viewed as a bad citizen who is getting better.”

Walmart said Thursday it was still determining how much it would save as a result of the corporate tax cuts, although the savings are likely to be in the billions of dollars. In citing the pay raises and bonuses, the retailer joined other large companies — including AT&T, Southwest Airlines and Wells Fargo — that have said savings under the tax law provided the impetus for making similar moves.

Walmart is the nation’s single largest corporate taxpayer and its federal tax contributions account for almost 2 percent of all corporate income taxes collected by the Treasury.

Raising the starting wage would cost about $300 million and the bonuses will total about $400 million, Walmart said.

The company also said Thursday that it was expanding its maternity- and parental-leave policies to give full-time hourly employees 10 weeks of maternity leave and six weeks of paid parental leave. Those workers previously received up to eight weeks of maternity leave at half pay, and were not entitled to parental leave. The change will give full-time hourly workers at Walmart stores the same maternity- and parental-leave benefits as the company’s salaried employees.

The changes in the leave policy are particularly expansive, putting shelf-stockers and cashiers on the same footing as many white-collar, college-educated workers across corporate America.

“It’s our people who make the difference, and we appreciate how they work hard to make every day easier for busy families,” Walmart’s chief executive, Doug McMillon, said in a statement.

The new maternity-leave policy will not apply to part-time workers, who make up a significant percentage of the company’s hourly workforce.