Wal-Mart Stores Inc. is boosting its starting hourly wage to $11 and delivering bonuses to employees, capitalizing on the USA tax overhaul to stay competitive in a tightening labor market.
Walmart on Thursday announced plans to give some employees a one-time bonus and boost its minimum hourly wage to $11-an indication that the lowest earners in the country are finally starting to see some benefit from the nearly decade-long economic recovery.
The mega-retailer announced Thursday that it will be increasing its starting wage rate for hourly workers to $11.
The highly controversial GOP tax bill-64 percent of voters opposed it-dropped corporate sales tax from 35 percent to 21 percent, inciting some companies and businesses to consider increased benefits for their workers.
The changes will benefit their more than 1 million hourly employees as soon as February.
It will also give a one-time bonus to associates who already make $11 or more that will range from $200 to $1,000, depending on how long they've been with the company.
The Walmart wage hike, taking minimum pay up from the current $10 an hour after in-house training, is aimed at helping the company attract workers at a time when the US unemployment rate is at 4.1 percent, a 17-year low, making it harder to attract and retain minimum wage employees. Full-time hourly associates will be eligible for 10 weeks of paid maternity leave. Those employees can receive as much as 5,000 per child to cover expenses such as adoption fees, translation fees and legal costs.
While it's not entirely clear how large an impact the new tax law will have, Walmart should see a significant benefit. The company is still looking at its effective tax rate, among other changes, he said. The payouts will total some $400 million, the company said.
Walmart's current starting wage is $9 until workers complete a training program that boosts their wage to $10.
Wal-Mart's wage hike follows one by Target (TGT), which increased its minimum wage to $11 an hour starting last October.
"Walmart really started to turn a corner a couple of years ago when it started to simultaneously invest in stores, logistics, e-commerce and employee wages", Perkins told CNBC. American Airlines and AT&T, among others, have announced $1,000 bonuses for employees because of tax reform.
"It is nothing but good news and we have some people out there, in my opinion, whose economic ideas are maniacal, who think that cutting taxes is bad because we have a deficit, " said Barnett. In a tight labor market, companies often need to pay more and provide better benefits in order to fill open positions. Wells Fargo is among a smaller group that has also pledged a $15-an-hour minimum wage following the tax plan's passage.