Walmart boosts starting pay, but closes Sam's Clubs, including 2 in NC
Posted January 11, 2018 12:09 p.m. EST
Updated July 13, 2018 2:06 p.m. EDT
NEW YORK — Wal-Mart Stores announced two business changes, one to benefit entry-level employees and one that will cut jobs, on Thursday. The big-box retailer will increase its starting wage rate for hourly employees in the U.S. to $11. It is also making plans to close 63 Sam's Clubs stores, a loss of potentially thousands of jobs.
The company said the Sam's Clubs designated for closure were losing money. Employees of those stores would have the option of other positions with Wal-Mart.
According to The Robesonian, the Sam's Club in Lumberton, which has 150 employees, would be among the cuts. The Morrisville Sam's Club location was also missing Thursday afternoon from the online store locator list.
A Walmart official said about 10 of those stores will be repurposed into e-commerce distribution sites.
The official said at least eight stores closed Thursday and the rest would shutter in the coming weeks. The closures came on the same day that Walmart announced it would boost its starting salary for U.S. workers to $11 an hour and hand out one-time cash bonuses.
The world's largest private employer is also handing out one-time cash bonuses to those who don't benefit from the pay hike and expanding its maternity and parental leave benefits.
The company said the moves that will affect more than a million hourly workers in the U.S. are tied to recently enacted tax legislation that will save it money. They do also reflect the tight labor market in which employers are competing for workers, as both Walmart and its rival Target have been raising wages for the past few years.
"Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S," CEO Doug McMillon said Thursday. President Donald Trump cheered the announcement with a tweet, saying, "Great news, as a result of our TAX CUTS & JOBS ACT!"
Dozens of other companies have announced worker bonuses following the passage of the Republican tax plan, such as AT&T and Comcast. 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.
The nation's unemployment rate has sat at 4.1 percent for three months now, the lowest level since 2000. The average for hourly earnings rose 2.5 percent in December from a year earlier. Still, that's about a full percentage point lower than is typical in a healthy economy. And wages for hourly retail workers have risen less than 9 percent since 1990, compared with 18 percent for overall workers in the private sector.
Walmart says the wage increase benefits all hourly U.S. workers within its stores, including Sam's Club, its website and logistics. The company had raised its starting wage to $9 an hour in 2015, and says workers could go up to $10 an hour after completing an entry-level training program. Rival Target Corp. had raised its minimum hourly wage to $11 in October, and said it would raise wages to $15 by the end of 2020.
The one-time bonus between $200 and $1,000 based will be given to Walmart employees that won't receive a pay raise. The bonus is based on length of service, with workers with at least 20 years qualifying for $1,000. In all, Walmart employs 2.3 million people around the world, 1.5 million of which are in the U.S.
Walmart has invested $2.7 billion in higher wages and training for workers to lower turnover and make the shopping experience more appealing. It has done well and strengthened its hand in online retail as many other retailers have struggled.
Parental leave has been another area in which retailers including Target and Ikea have been trying to offer better benefits. Walmart on Thursday promised full-time hourly U.S. employees 10 weeks of paid maternity leave and six weeks of paid parental leave. Salaried employees will also receive six weeks of paid parental leave.
The Bentonville, Arkansas-based company also promised help with adoptions, offering full-time hourly and salaried workers $5,000 per child that can be used for expenses such as adoption agency fees, translation fees and legal or court costs.
In offering the bonuses, Walmart joins companies including American Airlines, AT&T and Bank of America that have announced $1,000 worker payouts following the passage of the Republican tax plan that slashed the corporate tax rate from 35 percent to 21 percent. The companies say the bonuses they've announced are a way to share some of their bounty with their workers, though in some cases it's a very small percentage of their gains.
One-time payouts are far less valuable to employees than permanent pay raises. About a dozen banks have said they will raise their minimum wages. A handful of mostly small companies have announced pay increases for most of their workforces. And a few have said they will raise their contributions to their employees' retirement plans.