The truth about Walmart’s pay raises
The hypocritical move had little to do with last year’s “tax reform” bill.
Walmart, the world’s largest brick-and-mortar retailer, recently pulled a most cringeworthy bait and switch.
First the bait: On Jan. 11, the company announced that it was raising its minimum wage to $11 per hour and doling out bonuses of up to $1,000. The notoriously cheapskate company — which once gave its workers the holiday bonus of providing directions on how to apply for food stamps — attributed its newfound largesse to the recently passed Republican tax cuts.
The rich, who benefit disproportionately from the tax “reform,” joined with their sycophants in gushing over the news. They declared that Walmart’s move clearly showed the virtues of trickle-down economics.
But Walmart’s claim that the tax cut made the wage increase possible is ludicrous on several levels.
First, the company is headed toward about $12 billion in net income this year. So do the math, as Money did: It will take only nine days of earnings to cover the raises and bonuses.
The company could already afford the raise, tax cuts notwithstanding.
Second, Walmart has been raising wages steadily to compete for good workers. Now, with the unemployment rate at 4 percent, employees are harder than ever to find. And the competition for talent led Target to increase its minimum wage to $11 an hour months ago. Walmart is playing catch-up, not reacting to tax cuts. Third, recall that the company raised its minimum wage to $9 per hour in 2015 and $10 per hour in 2016. So increasing to $11 per hour for 2018 is fairly unremarkable — and clearly part of a strategy hatched years ago.
Finally, in announcing its wage increase, Walmart acknowledged that it didn’t even know how much it would save from changes in the tax law.
So the cause-and-effect claim touted by Walmart — tax cuts mean higher wages — a claim cheered by Republicans high and low, turns out to be a tall tale.
Now the switch.
On the same day it announced the wage increase, Walmart said it was closing 63 Sam’s Club stores around the country. That meant the company would be letting go of as many as 10,000 employees.
Shoppers and employees alike were met with locked doors and “Store Closed” signs — with no warning whatsoever.
So perhaps Walmart hoped to deflect attention from its mass firing by making a show of wage increases.
Walmart hoped to deflect attention from its mass firing by making a show of wage increases. The company could already afford the raise, tax cuts notwithstanding.
WE KNOW WHERE THE TAX BENEFITS REALLY GO
Other large companies — including AT&T, Southwest Airlines, Wells Fargo and Fiat Chrysler Automobiles — also said they would use tax savings to help their employees. We’ll see how that pans out.
But we can be certain that the lion’s share of benefits from the new tax scheme will go to corporate stock buybacks, shareholders, and already overpaid executives. Several large companies, including Cisco, Pfizer and CocaCola, have admitted as much.
The New York Times reported that many economists doubted the tax cut would have a helpful impact on wages. In an economic research memo obtained by the Times, Goldman Sachs wrote that “we expect no significant shortterm effect of tax reform on” average hourly earnings.
Walmart, with the help of its Republican and rightwing media cheerleaders, is either lying or jumping the gun in claiming that tax reform is already working. And the company’s attempt to win goodwill for itself even as it terminates thousands of employees is cynical and tasteless.