Walmart is capitalizing on its newfound savings under the recently signed tax reform bill by increasing workers’ starting hourly wage to $11 and providing substantial bonuses to employees, in an effort to remain competitive in an increasingly tight labor market.
The retail giant announced Thursday that the wage increase and seniority based bonuses take effect next month. The one time bonuses of up to $1,000 will cost the company $400 million, while increasing workers’ starting hourly wage from $9 to $11 will cost $300 million on top of pre-planned wage increases.
“Today, we are building on investments we’ve been making in associates, in their wages and skills development,” Doug McMillon, Walmart president and CEO, said in a statement. “It’s our people who make the difference and we appreciate how they work hard to make every day easier for busy families.”
McMillon added:
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. However, some guiding themes are clear and consistent with how we’ve been investing — lower prices for customers, better wages and training for associates and investments in the future of our company, including in technology. Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.
The tax bill, which lowered the corporate rate from 35 to 21 percent, also prompted the company to expand its maternity and parental leave policy and provide financial assistance to employees planning to adopt.
Walmart — long derided for providing low wages and substandard working conditions — has been forced to raise wages and improve worker benefits in the face of competition from other big box retailers and successive years of a tightening labor market.
Target, one of Walmart’s top labor competitors, announced they would increase their starting hourly wage to $11 in September, vowing another increase to $15 by 2020. (RELATED: Target Promises To Boost Minimum Wage To $15)
The announcement comes after a number of other massive U.S. firms such as Waste Management, Jet Blue and Bank of America made similar promises to increase employee wages and bonuses.
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