Wal-Mart Stores Inc. will raise the starting wage rate for all of its U.S. 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. Additionally, the Bentonville, Ark.-based mega-retailer is creating a new benefit to help associates with adoption expenses. According to the company, all of these wage and benefit changes will positively affect its 1 million-plus U.S. hourly associates.
This news was somewhat overshadowed, however, by the company's abrupt decision to shutter 63 Sam's Clubs, including some locations that closed with no advance warning to associates.
Regarding the wage and benefit moves, Walmart President and CEO Doug McMillon described the chain as “building on investments we’ve been making in associates, in their wages and skills development. It’s our people who make the difference, and we appreciate how they work hard to make every day easier for busy families.”
Added McMillon: “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. 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. Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.”
Taking effect next month, the wage hike will be about $300 million incremental to what was already included in next fiscal year’s plan. The one-time bonus is an additional payment to associates of about $400 million in the current fiscal year, which ends Jan. 31.
In assessing potential additional investments made possible by the new tax reform law, Walmart will consider the needs and expectations of associates, customers and shareholders while working within its financial framework of strong, efficient growth; consistent operating discipline; and strategic capital allocation. Further details will be made public, as appropriate, when the company posts its quarterly results in February.
As for the investments already revealed:
- The bonus amount will be based on length of service, with associates of at least 20 years’ standing qualifying for $1,000. 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 then be paid as quickly as practical.
- The starting wage rate increase, which is in addition to wage hikes already slated for many U.S. markets this coming fiscal year, applies to all U.S. hourly associates, including those who work in stores, Sam’s Clubs, the ecommerce division, logistics and the company’s home office.
- 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. Salaried associates will also get six weeks of paid parental leave.
- The adoption benefit, available to both full-time hourly and salaried associates, will come $5,000 per child and may be used for such expenses as adoption agency fees, translation fees and legal or court costs.
The company is largest retailer to date to offer a tax reform-related bonus to employees. Wilmington, Del.-based Wakefern Food Corp. member Kenny Family ShopRites, which operates six stores in the state's New Castle County, said earlier this month that it would give $1,000 bonuses to 150 associates in the wake of the legislation’s passage.
While many associates will no doubt welcome additional money in their pockets, some critics have accused Walmart of creating a smokescreen to hide some less-than-savory business practices.
“While pay raises are usually a good thing, this is nothing but another public relations stunt from Walmart to distract from the reality that they are laying off thousands of workers and the ones who remain will continue to receive low wages," noted Rudy Parraz, director of Making Change at Walmart, a campaign run by the Washington, D.C.-based United Food and Commercial Workers International Union (UFCW). "The fact is that Walmart is not permanently investing the estimated $2 billion it will receive annually from Trump’s tax giveaway to its workers – it is keeping almost all of it. This announcement is attempt to repair a crumbling image, while ignoring thousands of its workers who struggle year after year to pay their bills or depend on government assistance."
Further, according to Parraz: "Once you crack the veneer, you see that Walmart’s wage increases does not raise hourly wages for many of its workers. Hourly wages for those workers making above $11 dollars will essentially stay the same. Workers will get a one-time bonus or raise, but not both."
Walmart operates 11,600 stores under almost 60 banners in 28 countries and ecommerce websites.