Walmart Attributes Higher Starting Wage, Expanded Benefits to Tax Reform

Stephen Miller, CEBS By Stephen Miller, CEBS January 12, 2018
Walmart Attributes Higher Starting Wage, Expanded Benefits to Tax Reform

The tax act signed into law in late December lowers the corporate tax rate from 35 percent to 21 percent, starting this year. In recent weeks, several large U.S. corporations have announced they will use part of their tax savings to pay employees special "tax cut" bonuses and to enrich their benefit programs. Walmart, the largest private employer in the U.S. and the nation's single largest corporate taxpayer, announced on Jan. 11 that it will raise the minimum wage it pays its employees to $11 dollars an hour, up from the current $9, and expand paid maternity and parental leave to full-time hourly workers. 

Walmart to Raise Hourly Wage and Give Out Tax-Cut Bonuses

Walmart President and CEO Doug McMillon announced to employees, "As you know, the President and Congress have approved a lower business tax rate [and so] we're pleased to tell you that we're raising our starting wage to $11 an hour for Walmart U.S., Sam's Club, Supply Chain, eCommerce and Home Office hourly associates effective in February." Walmart is also providing a one-time bonus to hourly workers that will range from $200 to $1,000 depending on their length of service. McMillon said the company is "early in the stages of assessing the opportunities" that tax reform creates for Walmart.

Pay Raise Will Help Walmart Stay Competitive with Rivals

Walmart has fought in recent years to improve its image in the U.S. as it weathered criticism over its treatment of employees. With the wage increase and bonus payment, the company seeks to even its pay gap with resurgent rival Target Corp., which raised its base pay to $11 last fall, while sending a high-profile thank you to the U.S. government for slashing the corporate tax rate.

[SHRM members-only toolkit: Designing and Managing Incentive Compensation Programs]

Walmart Expanding Maternity and Parental Leave

Walmart says it's also expanding its maternity and parental leave policy because of the tax reform law. Full-time hourly workers in the U.S. will get 10 weeks of paid maternity leave; fathers and partners will get six weeks of paid parental leave. Walmart's full-time hourly workers have previously received up to eight weeks of maternity leave at half-pay, with no parental leave benefit for fathers or partners.

The new policy will give full-time hourly workers at Walmart stores the same maternity and parental leave benefits as the company's salaried employees. The changes affect more than 1 million hourly workers.

The retailer is also creating a new benefit to assist associates with adoption expenses. The benefit, which will be available to full-time hourly and salaried workers, will total $5,000 per child. Employees who adopt also will be able to take advantage of paid parental leave.
(New York Times and CNNMoney

Higher Pay but Fewer Workers

Walmart announced that it will lay off thousands of workers across the country as it closes 63 Sam's Club locations. The announcement came on the same day the retail giant announced it was raising its starting minimum wage for new employees to $11 an hour.
(The Hill

Employers Giving Out Tax Cut Bonuses, Raising 401(k) Matches

Walmart's decision makes it the latest U.S. corporation to reinvest expected tax savings into employees' pay and benefits. AT&T, American Airlines and Southwest Airlines said they will pay a special $1,000 bonus to workers, thanks to the new tax law. Fifth Third Bancorp, Wells Fargo and Boeing, among others, also announced that they would pass along tax savings to their workers. Aflac and Nationwide Mutual Insurance tied increases in their 401(k) matches to the tax legislation.
(SHRM Online)

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