Edit
Retailers

Walmart Hikes Worker Wages in Wake of Tax Changes

$700M in bonus, hourly bumps will amp industry wage pressures

In a move likely to further increase wage pressures industrywide, Walmart is bumping its minimum wage to $11 per hour and will provide employees with one-time cash bonuses as part of its expected windfall from newly enacted tax changes.

The Bentonville, Ark.-based retailer also said it will be expanding its maternity and parental leave benefits, and will create a new benefit to assist associates with adoption services.

Walmart's new wage rates will take effect next month and represent an investment of $300 million, in addition to what was included in the company’s new fiscal year, which begins Feb. 1. The one-time bonuses, up to $1,000 for certain workers, represent an additional payment to associates of about $400 million in the current fiscal year.

The announcement comes as analysts watch Walmart for clues as to how it will deploy the anticipated benefits of tax relief, with some saying its influence and current sales momentum would likely spark competitors to follow suit. Walmart’s move also continues a trend toward higher retail worker rates set largely into motion when it announced phased in minimum wage increases in 2015.

Minimum hourly wages for workers at Walmart rose to $10 per hour in February of 2016. Since then, companies including Target and Kroger have said they were also paying more for workers. Fast-growing hard discounters requiring few employees, such as Aldi and Lidl, may also be playing a role in increasing wage pressure.

“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 Doug McMillon said in a statement. “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.”

While the new law will create some financial benefit for the company, Walmart said it is in the early stages of assessing potential additional investments, including those that might benefit shareholders more directly. Further details will potentially be revealed when the retailer reviews its next round of financial results on Feb. 20.

Walmart said associates in the U.S. will share in tax savings through:

  • A one-time bonus benefiting all eligible full- and part-time hourly associates in the U.S. The amount of the bonus will be based on length of service, with associates with at least 20 years qualifying for $1,000. A discrete one-time charge will be taken in the fourth quarter of the current year to account for the bonus; qualification will be determined before the end of the month and payments will be paid as quickly as practical thereafter.
  • An increase in Walmart’s starting wage rate to $11 an hour, effective in the Feb. 17 pay cycle. The increase applies to all hourly associates in the U.S., including stores, Sam’s Clubs, eCommerce, logistics and Home Office.
  • An expanded parental and maternity leave policy, providing full-time hourly associates in the U.S. with 10 weeks of paid maternity leave and six weeks of paid parental leave. Salaried associates will also receive six weeks of paid parental leave.
  • Walmart will provide financial assistance to associates adopting a child. The adoption benefit, available to both full-time hourly and salaried associates, will total $5,000 per child and may be used for expenses such as adoption agency fees, translation fees and legal or court costs.

Trending

More from our partners