Walmart raises U.S. worker pay following tax cut

Ann Santiago
January 12, 2018

Walmart said the new tax law will create "some financial benefit for the company" and that is it is in the early process of assessing additional investments.

The company also said on Thursday that it was expanding its maternity- and parental-leave policies to give full-time hourly employees 10 weeks of maternity leave and six weeks of paid parental leave.

AT&T similarly disclosed intentions to invest an additional $1 billion into the 2018 and pay a $1,000 bonus to more than 200,000 AT&T US employees.

Amid the sweeping USA tax overhaul, Walmart said Thursday it's raising its hourly wage to $11, giving new bonuses to employees and expanding maternity and parental leave.

Economists and professors, though, said Walmart had little choice but to raise its wages if it wanted to stay competitive with peers like Target, which raised its hourly starting wage to $11 late previous year, with plans to increase it to $15 by 2020.

The changes will benefit their more than 1 million hourly employees as soon as February.

Walmart said it was still assessing new U.S. tax rules and "potential additional investments". So competitive is the market that Morgan Stanley reckons in most cases only 50 percent of what retailers save in tax will make it back to investors.

The moves by Wal-Mart and others could help move the needle on stubbornly stagnant wage growth during the current economic expansion - if an increasing number of companies follow with their own pay hikes. It will range from $200 to $1,000 depending on workers' length of employment with Walmart.

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. Large employers also have been under pressure to boost benefits for workers because unemployment rates are at historic lows, allowing job seekers to be pickier.

Walmart is the latest major corporation to attribute employee bonuses to the Trump administration's tax cuts, which would effectively reduce the corporate tax rate from 35 percent to 21 percent. The payscale for hourly workers will be from $11 to $24.70 per hour, the company said.

Walmart invested $2.7 billion over two years to improve training and increase pay in a program it announced in 2015. During the same quarter last year, the company earned $0.98 EPS. analysts forecast that Wal-Mart Stores, Inc. will post 4.43 earnings per share for the current fiscal year. This ratio also gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately. Available to both full-time hourly and salaried employees, benefits will total $5,000 per child and may be used for expenses such as adoption agency fees, translation fees and legal or court costs.

The bank said on December 20, 2017 that it would raise the company's minimum wage to $15 an hour, from $13.50. Wal-Mart also said it will spend another $400 million in the current year ending January 31 on one-time bonuses ranging from $200 to $1,000 based on length of service.

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