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Walmart Announces Higher Starting Wages, Bonuses, and Benefits Thanks to Tax Reform

12 January 2018

Walmart announced Thursday that it will raise the wages of its store employees to $11 per hour by February.

Wal-Mart Stores Inc. will raise the starting wage rate for all of its USA hourly associates to $11, expand maternity and parental leave benefits, and give eligible full- and part-time employees a one-time cash bonus of up to $1,000. With the wage increase and bonus payment, the company seeks to even its pay gap with resurgent rival Target Corp., while simultaneously sending a high-profile thank you to the US government for slashing the corporate tax rate.

Walmart's moves are expected to affect more than 1 million employees in the U.S. Women working as associates and in other low-paying positions especially stand to gain. Those who have worked for the company for 20 years are eligible for the top-tier bonus, while others will be handed smaller payouts based on their seniority.

The wage increase announced Thursday by Walmart benefits all hourly USA workers within its stores, Sam's Clubs, eCommerce, logistics and home office.

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It is also expanding its leave policy to provide full-time hourly associates with 10 weeks of paid maternity leave and six weeks of paid parental leave. Full-time hourly and salaried workers can receive up to $5,000 per child to use for adoption agency fees, translation services or legal costs.

While it's not entirely clear how large an impact the new tax law will have, Walmart should see a significant benefit.

Walmart said the wage increases would add about $300 million in expenses to its budget for the next fiscal year.

Treasury Secretary Steve Mnuchin thanked Walmart in a press conference with reporters on Thursday for investing its tax savings in raising its minimum wage.

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The company says the changes will affect more than 1 million of its United States employees.

In the past, Walmart raised starting wages to $9 in 2015 and then $10 for most workers the following year. Plus, states like MA and Washington have established $11 an hour as the going rate for all workers, meaning that Walmart already had to pay employees in those states that amount. Since this cut is permanent, the true benefits to Walmart will grow much larger over time.

Walmart's announcement follows companies like AT&T Inc (T.N), Wells Fargo & Co (WFC.N) and Boeing Co (BA.N), which have all promised more pay for workers since the Republican-controlled U.S. Congress passed the biggest overhaul to the U.S. tax code in 30 years.

"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.

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The retail chain employs about 2.1 million people worldwide - an estimated 1.4 million of which are in the U.S - which means an average bonus works out to be about $190. Costco's starting wage is at least $13 an hour while Target is gradually its starting hourly wage to $15 by 2020.

Walmart Announces Higher Starting Wages, Bonuses, and Benefits Thanks to Tax Reform