Walmart CEO says ‘Happy New Year’ with pay raise for employees
Walmart CEO Doug McMillon announced plans today for the retailer to raise the minimum wage it pays to all hourly employees from $10 to $11. Walmart also plans to pay a one-time cash bonus of between $200 and $1,000 to all eligible employees while expanding its maternity and parental leave benefits. The changes will affect more than one million hourly associates in the U.S.
Mr. McMillon credited the recent passage of a lower corporate tax rate by Congress and President Trump as the impetus for the retailer’s largesse.
“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,” said Mr. McMillon 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.”
Walmart plans to pay the one-time bonus — a total cost of $400 million — during the current fiscal year, which ends on Jan. 31. The increase in hourly wages will begin on Feb. 17 and add $300 million to the retailer’s payroll costs in the next fiscal year.
Walmart’s expanded benefits will provide for 10 weeks paid maternity leave and six weeks for parental leave. The parental leave will cover both hourly and salaried employees.
The company will also provide up to $5,000 in financial assistance to associates looking to adopt a child. The adoption benefit may be used to cover adoption agency fees, translation and legal costs.
The National Retail Federation (NRF), which strongly backed passage of a lower corporate tax rate and hailed the eventual passage of the legislation, played up higher wages for employees as one of its potential benefits.
Back in October, David French, NRF senior vice president for government relations, pointed to an analysis by the association that found the average “C” corporation, many of which are retailers, paid the average worker nearly $4,700 less per year because of the previous 35 percent corporate tax rate. One of the debates around the legislation, prior to passage, was what percentage of newly found funds would be passed on to low-wage workers and how much would end up being dropped to the bottom line, used to buy back shares, etc.
- Walmart to Raise U.S. Wages, Provide One-Time Bonus and Expand Maternity and Parental Leave – Walmart
- CEO Doug McMillon’s Note to Associates on Tax Savings – Walmart
- Retailers Call Budget Resolution Step Toward Tax Reform That Will ‘Unleash Economic Growth’ – National Retail Federation
DISCUSSION QUESTIONS: What is your reaction to Walmart’s decision to raise hourly worker wages, pay a one-time bonus to employees and expand maternity and parental leave benefits as a result of the recent lowering of corporate tax rates in the U.S.? Will other retailers follow suit in short order?