Walmart is raising the minimum entry-level wage for its hourly workers to $11, following similar news from major American employers AT&T and Wells Fargo, US News & World Report says. The promised pay increases come soon after a GOP-led tax reform package lowered the corporate tax rate from 35% to 21%. Taking less from corporations, Republican lawmakers argue, will leave more for worker compensation, further capital investments in America and price drops for consumers.
Walmart Increases Base Pay, Employee Benefits
Walmart is the world’s biggest retailer and the largest private employer in the United States, with over 1 million hourly workers in around 4,500 stores across the country.
Alongside an increase in hourly wages, the big box giant says it’s going to extend maternal and family leave benefits. Employees will also get a cash bonus this year, calculated on length of employment, that reaches up to $1,000 for workers who have been with the company for at least 20 years. A benefit to off-set the costs of child adoption is also being added. And more employee benefits could be on the way.
“We are in the early stages of assessing the opportunities tax reform creates for us,” says Doug McMillon, President and CEO of Wal-Mart Stores, Inc. In a press release, McMillon said the company was “building on investments we’ve been making in associates, in their wages and skills development.”
Walmart raised its entry-level wage to $9 per hour in 2015 and, in 2016, offered employees who completed a training program an hourly wage of $10. Raising the internal minimum wage to $11 per hour will cost the employer an additional $300 million. And the one-time bonus program is expected to cost an extra $400 million this fiscal year.
One-Time Bonuses Aren’t The Answer, Critics Say
Critics of the Trump Administration say one-time bonuses, which have also been announced by AT&T and Comcast, are just a clever bit of corporate marketing. “It’s for sure a PR move,” according to Katie Bardaro, a vice present at PayScale who spoke with USA Today. Bonuses look good, the argument goes, but won’t lead to long-term improvement in a worker’s life.
And while that’s probably true, we’ve actually seen significant increases in hourly wages, too. On the heels of the tax reform bill’s passage, Wells Fargo (around 269,000 employees) and Fifth Third Bancorp (over 21,000 employees) are both raising base wages to $15 per hour. Fifth Third is also offering its workers a one-time bonus of $1,000, while Wells Fargo plans to set aside at least 2% of its profits for philanthropic missions.
Low Unemployment Drives Competition On Wages
Unemployment has dropped to its lowest rate in seventeen years. The latest Bureau of Labor Statistics numbers show an unemployment rate of 4.1% for October 2017, compared to a recent high of 10% in October 2009. And, by raising base pay, it’s certain that major employers are working to compete in an increasingly-tight labor market. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Walmart CEO McMillon says.