Walmart boosts pay in stores nationwide
NEW YORK — Walmart announced Thursday that it was boosting its starting salary for U.S. workers and handing out one-time bonuses to others.
Walmart cited tax reforms passed last month by Congress in announcing the higher hourly wages, bonuses and expanded parental benefits that will affect more than a million hourly workers in the U.S.
Large employers also have been under pressure to boost benefits for workers because unemployment rates are at historic lows, allowing job seekers to be pickier.
But low unemployment has meant that retailers have had trouble attracting and keeping talented workers, experts said. Walmart employees previously started at $9 an hour, with a bump up to $10 after completing a training program. Target had raised its minimum hourly wage to $11 in October, and said it would raise wages to $15 by the end of 2020.
“They raised the minimum wage because they have to,” Mark Zandi, chief economist at Moody’s Analytics, said. “The labor market is tight and getting tighter.”
Many small and independent retailers struggle to find workers even when they try to pay well and offer benefits.
Laurie Rose, owners of Olde Na- ples Chocolate usually has six workers during the winter months, the busy season in the resort city of Naples, Florida. But right now, she has just three. The store pays $12 an hour and offers a 401(k) account after a staffer has worked for a year, but Rose realizes that may not be enough for many potential workers. Rose would like to pay more, but she’d have to raise her prices and fears that would turn away customers.
While many department store chains such as Macy’s and Sears are struggling, retailers as a whole are still trying to hire. The retail industry is seeking to fill 711,000 open jobs, the highest on records dating back to 2001, according to government data. The longer those jobs go unfilled, the greater pressure on employers to offer higher wages.
Walmart, which reported annual revenue of nearly $486 billion in the previous fiscal year, said the wage increases will cost it an additional $300 million in the next fiscal year. The bonuses will cost it about $400 million in this fiscal
year, which ends on Jan. 31.
“The wage increases will make a big difference to Walmart’s lowest-paid associates,” said the Organization United for Respect at Walmart.
It joins dozens of other companies including American Airlines, AT&T and Bank of America that have announced $1,000 worker payouts following the passage of the Republican tax plan that reduced the corporate tax rate from 35 percent to 21 percent.
“Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Walmart CEO Doug McMillon said Thursday. President Donald Trump cheered the announcement with a tweet, saying, “Great news, as a result of our TAX CUTS & JOBS ACT!”
Walmart has invested $2.7 billion in higher wages and training for workers to lower turnover and make the shopping experience more appealing. It has done well and strengthened its hand in online retail as many other retailers have struggled.
The company said the wage increase benefits all hourly U.S. workers at its stores, including Sam’s Club. Hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters, will benefit from the wage increase. The onetime bonus between $200 and $1,000 will be given to Walmart employees who won’t receive a pay raise. The bonus is based on length of service, with workers with at least 20 years qualifying for $1,000. In all, Walmart employs 2.3 million people around the world, 1.5 million of which are in the U.S.
Parental leave has been another area in which retailers including Target and Ikea have been trying to offer better benefits. Walmart on Thursday promised fulltime hourly U.S. employees 10 weeks of paid maternity leave and six weeks of paid parental leave. Before, full-time hourly workers received 50 percent of their pay for leave. Salaried employees, who already had 10 weeks paid maternity leave, will receive more paid parental leave.
For the first time, Walmart also promised to help with adoptions, offering full-time hourly and salaried workers $5,000 per child that can be used for expenses such as adoption agency fees, translation fees and legal or court costs.