Walmart raises starting wages

Customers shop at a Walmart store in January 2017 in Skokie Illinois

Customers shop at a Walmart store in January 2017 in Skokie Illinois

Wal-Mart Stores Inc. will raise the starting wage rate for all of its US hourly associates to $11, expand maternity and parental leave benefits, and give eligible full- and part-time employees a one-time cash bonus of up to $1,000.

Walmart's CEO Doug McMillon said in a statement that the combined wage and benefit changes, which will benefit more than 1 million USA hourly associates, are a result of tax savings from this year's tax reform that reduced the country's corporate tax rate to 21%.

Walmart, which said the changes would take effect in mid-February, also plans to give one-time cash bonuses to some part-time and full-time workers, ranging from $250 (for workers who have been at Walmart for two to four years) to $1,000 (for those who have been working there for 20 or more years).

Walmart said on Thursday it would raise entry-level wages for hourly employees to $11 an hour as it benefits from the biggest overhaul of the United States tax code in 30 years. Salaried employees will also receive six weeks of paid parental leave.

In offering the bonuses, Walmart joins companies including American Airlines, AT&T and Bank of America that have announced $1,000 worker payouts following the passage of the Republican tax plan that slashed the corporate tax rate from 35 percent to 21 percent. Currently, Walmart's starting wage is $9, which goes up to $10 once employees complete a training program. Most Walmart employees, of course, haven't worked there that long.

But low unemployment has meant that retailers have had trouble attracting and keeping talented workers, experts said.

In addition, Walmart is raising its starting hourly wage to $11.

The pay hike at Walmart follows similar actions at rival Target Corp. The stock advanced 43 percent in 2017.

The nation's unemployment rate has sat at 4.1 percent for three months now, the lowest level since 2000.

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Even with the wage bump, many workers will struggle if they're the sole breadwinner.

The move also comes amid a 17-year low for the US unemployment rate, which has intensified competition for good workers. Costco has had a minimum wage of $13.50 since 2016.

The wage increase announced Thursday by Walmart benefits all hourly US workers within its stores, Sam's Clubs, eCommerce, logistics and home office. The average for hourly earnings rose 2.5 percent in December from a year earlier. A discrete one-time charge will be taken in the fourth quarter of the current year to account for the bonus; qualification will be determined before the end of the month and payments will be paid as quickly as practical thereafter.

While the new law will create some financial benefit for the company, Walmart is early in the process of assessing potential additional investments.

"Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.", Chief Executive Officer Doug McMillon said in Thursday's statement. The strategy paid off over the holidays: Target's store associates fulfilled 70% of its online sales, which helped to dramatically boost online sales compared to past year.

"Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.".

Walmart said hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters, will benefit from the wage increase.

The expanded parental and maternity leave policy will provide full-time hourly associates with 10 weeks of paid maternity leave and six weeks of paid parental leave. Parents who adopt kids will get the same benefit, along with $5,000 to help cover the costs.

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