VOL. 42 | NO. 2 | Friday, January 12, 2018
Walmart boosts starting pay to $11 an hour, offers bonuses
NEW YORK (AP) — Walmart, the world's largest private employer, is boosting its starting salary for U.S. workers to $11 an hour and handing out one-time cash bonuses. The company cited tax legislation that will help it save money, but the moves also reflect the tight labor market in which employers are competing for workers.
The world's largest retailer said the moves, which also include expanded parental leave benefits, will affect more than a million hourly workers in the U.S. Employees previously started at $9 an hour, with a bump up to $10 after completing a training program. Its rival Target had raised its minimum hourly wage to $11 in October, and said it would raise wages to $15 by the end of 2020.
"Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.," Walmart 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. 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.
But low unemployment has meant that retailers have had trouble attracting and keeping talented workers, experts said. And there's more competition from online retailers, which typically pay warehouse employees who pack and ship orders more than stores pay. Job postings at an Amazon warehouse in Ohio, for example, offer a starting pay of $14.50 an hour.
"This is about the evolution of retail," said Michael Mandel, chief economic strategist at the Progressive Policy Institute. "The rise of e-commerce is leading to higher wages."
Walmart said the wage increase benefits all hourly U.S. workers at its stores, including Sam's Club. But the company also is closing some Sam's Club locations, according to local news reports. On Twitter, it responded to queries by saying, "After a thorough review of our existing portfolio, we've decided to close a series of clubs and better align our locations with our strategy."
Walmart said hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters, will benefit from the wage increase.
A labor group called the higher pay a "substantial step," but said that it still fell short.
"The wage increases will make a big difference to Walmart's lowest-paid associates, but do not yet match Target's commitment to raise pay to $15 an hour," said the Organization United for Respect at Walmart.
The one-time bonus between $200 and $1,000 will be given to Walmart employees who 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.
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.
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. Before, full-time hourly workers received 50 percent of their pay for leave. Salaried employees, who already had 10 weeks paid maternity leave, will receive more paid parental leave.
Maternal and paternal benefits can keep younger workers at the company longer, said Craig Rowley, a senior client partner at Korn Ferry Hay Group, a human resources consulting firm.
For the first time, Walmart also promised to 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.
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.