Walmart employees are getting a pay bump, and the company says it’s courtesy of the corporate tax cut Republicans rushed through Congress last year. That’s good P.R. — but probably only part of the story.
The retail giant announced Thursday that it is raising the minimum wage for hourly associates to $11, and handing out bonuses of up to $1,000 to employees. The company also said it would introduce more generous paid family leave policies, and offer an adoption benefit.
Walmart credits the Republican tax plan for its decision to hike wages and offer bonuses. “We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders,” Walmart CEO and president Doug McMillon said in a statement, which cited lower prices for customers and better wages as among the company’s goals.
Walmart isn’t the first company to shower a nice public thank you on the GOP tax plan. Boeing, AT&T, Wells Fargo, and Comcast have all said they were either investing more in the US or offering perks to employees, from bonuses to minimum wage boosts to other investments in employee development. Capital One announced Thursday it’s increasing its minimum hourly wage to $15.
President Donald Trump has promoted this good news from Walmart and other companies as more proof of the benefits of the “TAX CUTS & JOBS ACT!”
And it is very good news. Walmart is America’s largest private employer, with more than 1.5 million sales associates in the U.S. Hourly wage increase, bonuses, and expanded family leave policies are undoubtedly a boon to workers.
Corporations won big with the GOP tax plan, and should have more money to invest in workers. (How much workers will benefit overall is another issue.) But the tax overhaul can’t hog all the credit.
The economy is doing well — but it’s not clear that Republicans can take all the credit
Other factors likely influenced Walmart’s decision — even if they didn’t make it into the press release. The economy is strong, and the unemployment rate has dipped to 4.1 percent for the third month in a row, the lowest level since 2000. Wage growth, which has lagged behind job growth, is now starting to pick up, in part because that unemployment rate is so low.
“A lot of raises are coming,” Alan Cole, formerly an economist at the Tax Foundation said on Twitter. “Most of them would have happened without tax reform.”
We're heading towards a regime in which profitable businesses compete for scarce workers.— Alan Cole (@AlanMCole) January 11, 2018
If we see investment rise as a % of GDP, that would heighten such competition. It would also be evidence toward the tax cut working how the CEA says.
I think investment will rise modestly.
It's an accident of history that we've hit a demand-side regime change and a supply-side regime change at the same time.— Alan Cole (@AlanMCole) January 11, 2018
The $11 hourly wage — which will go into effect in February — is also something Walmart is already paying out in states with that same minimum, reports Bloomberg. Massachusetts introduced an $11 minimum wage last year, and a total of 18 states raised their minimum wages in 2018, with California reaching $11 and Washington state hitting $11.50.
Other states and cities are on track to bump up their wages to $15 by 2020 or soon after. (The federal minimum wage, meanwhile, has remained stuck at $7.25 per hour.)
Walmart is also playing catch-up to some competitors. Target raised its wage to $11 for hourly employees in October 2017, with the goal of reaching $15 by 2020. Costco, a wholesale retailer, raised its minimum hourly wage in March 2016 to at least $13.
Business is also good. Walmart also hit its strongest quarterly U.S. sales growth in nearly a decade in its third quarter, according to the Wall Street Journal.
These conditions — including the tax bill — likely pushed Walmart to bestow benefits on workers. It’s also worth putting those actual benefits in context. As Bloomberg’s Matt Boyle points out:
Even with the wage bump, many workers will struggle if they’re the sole breadwinner. A rate of $11 an hour translates to $22,000 a year for a typical 40-hour week, with two weeks of unpaid vacation time. The federal poverty level for a family of four is about $24,600, according to the U.S. Census Bureau.
Employees will also get bonuses up to $1000 — but only for the longest-serving employees. According to Bloomberg, an employee who’s worked at the company for 20 years or more will be eligible for that $1,000; a worker at the company between 10 and 14 years could be rewarded $400.
And it’s not all rosy news for the company’s employees. On the same day Walmart made its blockbuster announcement, the company confirmed it is shuttering dozens of Sam’s Club stores, Walmart’s membership-based warehouse retailer.
At least 63 stores are closing, some as early as Thursday, though up to 12 of those stores will be converted to e-commerce facilities. Walmart has not confirmed exactly how many workers will lose their jobs. But the company said in a statement that affected Sam’s Club employees will still be able to collect the bonuses Walmart just announced.