As Walmart raises pay, Sam’s Club closes sites
TAX SAVINGS: Retailer will boost wages, give bonuses, and expand maternity and parental leave
Sam’s Club is shuttering 63 stores in a shift toward e-commerce as Walmart announces it will use some savings from the new tax bill to boost wages and benefits.
Walmart, the nation’s largest private employer, waded into the bumpy waters of partisan politics Thursday, announcing that it will use some of its savings under the new tax bill to provide wage increases, bonuses and expanded benefits to its hourly workers.
The giant retailer, which faces stiff competition for qualified workers in a tight labor market and pressure from unions to increase wages, said it would raise its minimum starting wage to $11 an hour, from $9. It will also expand maternity and family leave benefits, and give bonuses of up to $1,000 to eligible employees.
By tying its pay increases to the tax break it expects to receive, as other large companies have done in recent weeks, Walmart provided support for claims by the Trump administration and Republicans in Congress that the new tax law will ben-
efit not just the wealthy but also working-class Americans.
But within hours, Walmart had undercut its triumphal message when news leaked it was closing 63 of its Sam’s Club stores. Sam’s Club, a retail chain offering memberships, was soon trending on Twitter, and labor groups and Senate Democrats seized on the news to question Walmart’s motives and criticize the tax bill as failing to protect low-wage workers.
The United Food and Commercial Workers International Union, which hopes to represent Walmart’s non-unionized workforce, called the wage increase a “public relations stunt” meant to distract from the closings.
Senate Democrats, citing the closings and a $20 billion stock buyback announced last fall, said in a statement: “The real response of companies like Walmart to the Republican tax bill has been to ensure that its already high-paid executives and wealthy shareholders reap the overwhelming benefit, leaving thousands of workers standing in the cold without jobs.”
“They snatched defeat from the jaws of victory,” said Scott Galloway, a professor of marketing at New York University. “Walmart made a smart move in increasing wages and investing in human capital. Where they screwed up was politicizing it.”
Walmart, the country’s single largest corporate taxpayer, said Thursday that it was still determining how much it would save as a result of the new law.
Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a nonprofit research group, said it was difficult to forecast precisely how much Walmart would save. But based on the company’s average annual U.S. earnings over the past five years, he said, savings from the cut in the corporate tax rate alone could be $2.2 billion a year, or 40 percent.
Walmart said the wage increases and bonuses would cost the company roughly $700 million.
“Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Walmart CEO Doug McMillon said in a statement.
Walmart started the day with a celebratory message, with its early morning announcement about wage and benefit enhancements. Even some critics were impressed with some of Walmart’s changes — particularly in expanding maternity and parental leave.
Full-time hourly employees will receive 10 weeks of maternity leave and six weeks of paid parental leave. Those workers previously received up to eight weeks of maternity leave at halfpay, and were not entitled to parental leave.
The expanded leave benefits are particularly significant, putting shelf-stockers and cashiers on the same footing as many white-collar, college-educated workers in corporate America.
Our Walmart, a labor group, said that action on wage increases and maternity leave was a “substantial step, but still falls short of what all Walmart employees need to be able to provide for our families.”