Walmart workers win pay rise after Trump tax cuts

12 January, 2018, 03:28 | Author: Gladys Mathis
  • NATION-WORLD     Walmart raises hourly wage to $11 expands benefits     
       Walmart credited President Trump's tax cut for enabling the new policy

"Retailers have traditionally paid one of the highest effective corporate tax rates", Sandy Kennedy, the president of the Retail Industry Leaders Association, said at the end of December, when House and Senate Republicans finally reached an agreement to resolve the differences between their tax overhaul bills, CNBC reported.

The pay increase, Walmart's third minimum wage increase since 2015, and bonus will benefit more than 1 million USA hourly workers, the company said.

Walmart confirmed Thursday that it is closing dozens of Sam's Club warehouse stores across the country - a move that seems sure to cost jobs - on the same day it announced that it was boosting its starting salary for US workers and handing out one-time bonuses to others. On Thursday, Walmart promised to boost its minimum pay to $11 per hour along with an expanded maternity and parental leave benefits. McMillon said for eligible employees, Walmart will also contribute $5,000 to the cost of adoption.

While it's not entirely clear how large an impact the new tax law will have, Walmart should see a significant benefit.

"We think this is a prudent use of tax reform proceeds, as it reinforces the company's commitment to improving in-store service levels and will pressure other retailers to invest more heavily into wages and prices", Ben Bienvenu, an analyst at Stephens, said in a note.

The company said the change is in addition to wage increases already planned for many USA markets in the coming fiscal year.

Eleven dollars an hour equals about $19,000 a year for 34-hour weeks, which Walmart considers full time. The one-time bonuses result in an additional $400 million investment that Walmart will make in its staff in 2018.

Back in October, David French, NRF senior vice president for government relations, pointed to an analysis by the association that found the average "C" corporation, many of which are retailers, paid the average worker almost $4,700 less per year because of the previous 35 percent corporate tax rate.

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The move comes after Walmart raised salaries starting in 2015 while offering more training to its hourly store employees.

The retail company said the wage hike to $11 an hour would roll out in February.

The entry of Walmart into the tax-reform debate accelerates the contentious discussion over how much the tax plan, still only weeks old, truly factors into these corporate decisions. Wells Fargo is among a smaller group that has also pledged a $15-an-hour minimum wage following the tax plan's passage.

Walmart says that this is only the start of its plans to offer more benefits to its employees.

Walmart employees will soon feel the effects of recent GOP-led tax reforms in the place it matters most: their pockets.

According to ThinkProgress, the one-time bonuses for Walmart employees will amount to a little over 2 percent of the tax cuts' value to the company.

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.

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