In response to President Trump’s recent tax overhaul, Wal-Mart Stores Inc. plans to increase its minimum wage to $11 per hour and offer company-wide bonuses next month. The $11 increase comes on top of an existing plan to raise the minimum wage, and will cost Wal-Mart $300 million. The bonuses, which are based on seniority, could reach up to $1000 and will cost the retail giant an additional $400 million. The company also revised its maternal and parental leave policies, allowing parents more time off and compensation after having or adopting a child.
Wal-Mart is the U.S.’s largest private employer and has tried in recent years to improve the public’s perception of its poor treatment of employees. The wage increase and bonuses will equalize Wal-Mart’s pay gap with Target, which raised its minimum wage to $11 in October 2017, and will increase to $15 by 2020. The move is also seen as a high-profile ‘thank you’ to Trump’s administration for lowering the corporate tax rate. A number of other large corporations have pulled similar moves that are seen as largely cosmetic kowtows to the new administration.
Wal-Mart’s last increased wages in 2015 to $9 an hour, and then to $10 the following year for workers who completed a 90-day training course. Other stores already pay their employees this new wage. State-level labor laws over the years have already forced a significant number of Wal-Mart’s 4,700 stores to increase their minimum wage to $11 per hour.
Even with the wage increase, a Wal-Mart employee will earn only $22,000 a year. A family of four qualifies below the poverty line if it has an annual income of $24,600 or less. Wal-Mart’s decision comes amidst a trend of large-scale retail companies raising their minimum wages. Such increases have been stagnant despite a booming economy and low unemployment rate; Wal-Mart’s move will put pressure on other retailers to follow suit.
— TicToc by Bloomberg (@tictoc) January 11, 2018
Wal-Mart is competing for workers and trying to lure people back into the labor force; we have been discussing this for years, and it continues to develop as expectedhttps://t.co/VVcPt3o1dc via @business
— Barry Ritholtz (@ritholtz) January 11, 2018
However, some people are seeing the harsh reality the employees are facing:
Some perspective: “A rate of $11 an hour translates to $22,000 a year for a typical 40-hour week, without paid vacation time. The federal poverty level for a family of four is about $24,600, according to the U.S. Census Bureau.” https://t.co/x80BHYjl7s
— Ian Walthew (@IanWalthew) January 11, 2018
The average bonus for Wal-Mart associates — despite the $1,000 headline — will be $174.
($WMT says bonuses will cost $400 million, and it has 2.3 million associates.)
— Steve Goldstein (@MKTWgoldstein) January 11, 2018
This is all good and great, but not enough.