The truth about Wal­mart’s pay raises

Wisconsin Gazette - - Front Page -

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.


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.

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