After tax bill, Walmart plans to increase minimum wage and give bonuses

Walmart employee

After tax bill, Walmart plans to increase minimum wage and give bonuses

Walmart stores in Palm Bay, Melbourne, West Melbourne, and across the country will soon boost its starting hourly wage to $11 and deliver bonuses to employees, according to the Bentonville, Arkansas-based retailer.

Walmart announced on Thursday it will soon be raising its workers' starting wage rate for hourly employees to $11 in the wake of the Republican-backed tax plan.

The company also plans to expand its current maternity and parental leave policy for employees in the United States.

After boosting wages for some workers to $10-per-hour in 2016, Walmart was already on a path to paying $11-per-hour, especially after Target raised its minimum hourly wage to $11 a year ago.

"Today, we are building on investments we've been making in associates, in their wages and skills development", said Doug McMillon, Walmart president and CEO.

"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. "Given these changes, we have an opportunity to accelerate a few pieces of our investment plan". The wage increases are expected to cost the retail giant $300 million in what they are already planning for the upcoming fiscal year. It will range from $200 to $1,000 depending on workers' length of employment with Walmart. That benefit will also go to parents who adopt.

Walmart also credited the Republican tax reform for its latest wage hike, though the company announced its intention to raise pay almost three years ago, according to Bloomberg. The payscale for hourly workers will be from $11 to $24.70 per hour, the company said.

Wage increases at the lower end of the scale are typically a sign that labor markets are tight, said Elise Gould, a senior economist at the Economic Policy Institute.

The adoption benefit, available to both full-time hourly and salaried associates, will come $5,000 per child and may be used for such expenses as adoption agency fees, translation fees and legal or court costs. The one-time bonus is an additional payment to associates of about $400 million in the current fiscal year, which ends January 31.

"I would've been astounded if they hadn't raised wages", said Thomas Kochan, at professor at MIT's Sloan School of Management. There's a catch, though: The bonus is based on how long you've worked there, and to qualify for the $1,000, you must have worked there for at least 20 years.

Walmart employees with 20 years of experience will also pocket a one-time cash bonus of $1,000, dropping in a sliding scale down to $250 for workers with just two years on the job, a spokesman told CNBC.

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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