Walmart on Thursday announced plans to increase starting wage for all hourly employees in the U.S. to $11, including at Walmart stores, Sam’s Clubs, e-commerce operations, logistics and the company’s headquarters, according to a company press release.
The retail giant is also expanding maternity and parental leave, providing a one-time cash bonus for eligible associates of up to $1,000 (for employees that have worked at the retailer for 20 years) and assisting associates with adoption expenses, according to the company.
The wage hike will take effect in February and will be approximately $300 million incremental to what was already included in the company’s next fiscal year’s plan.
Walmart is positioning its latest wage increase as a response to tax reform passed late last year that could provide the retailer with a windfall to share, thanks to a significant reduction in the corporate tax rate.
"We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders," Walmart CEO Doug McMillon said in a statement. "However, some guiding themes are clear and consistent with how we’ve been investing — lower prices for customers, better wages and training for associates and investments in the future of our company, including in technology."
But the move could have at least as much to do with rising minimum wage requirements nationwide that are increasingly leaving the $7.25 federal minimum, and even Walmart’s new minimum, in the dust.
New minimum-wage rates in 18 states and 19 cities, ranging from as much as $12 to $15 an hour, took effect in the new year, according to the National Employment Law Project. Later this year, another three states and 18 cities and counties are set to increase their rates as well, with other campaigns underway in 14 states and 3 cities, all pushing for rates in the $12 to $15 range, according to a NELP report.
Walmart has long suffered criticism for its hourly pay, not only from worker advocates, but also from states and fiscal watchdogs who argue many Walmart employees are a significant drain on taxpayer-funded social welfare programs. Making Change at Walmart, an unofficial union of Walmart employees, in an email to Retail Dive last week, called on the retailer to leverage its new tax benefit to provide a living wage; it's new minimum wouldn't meet that standard.
The increase does bring Walmart’s hourly compensation closer to that of rivals, many of which have already bested it. Target in October, for example, raised its minimum hourly wage for all team members to $11, along with a commitment to increasing it to $15 by the end of 2020. The company called the move a "significant investment" that will allow the company to recruit and retain qualified store associates that elevate experiences for customers.
Costco has enjoyed the warmest reputation when it comes to giving workers above-average pay and benefits, a proposition that has consistently pleased customers, research has found. In 2016 that the membership retailer announced a hike in its minimum starting hourly pay, the first in nine years, boosting those wages $1.50 to $13, well above the federal minimum and approaching the highest minimum wages set by some localities in recent years.
In fact, Costco's above-average worker compensation is actually part and parcel of its success, many experts say. Certainly its higher compensation costs haven’t impeded performance — the retailer's net sales soared 14.3% to $14.94 billion in December.