Markets

Walmart to Up Wages, Award One-Time Bonus

Walmart to Up Wages, Award One-Time Bonus

"The big-box retailer announced Thursday it will increase its starting wage rate for hourly employees in the U.S.to $11, and expand maternity and parental leave benefits", according to CNBC. A rate of $11 an hour translates to $22,000 a year for a typical 40-hour week, with two weeks of unpaid vacation time.

It will also give a one-time bonus to associates who already make $11 or more that will range from $200 to $1,000, depending on how long they've been with the company.

Investors didn't have a strong reaction to Wal-Mart's pay hike.

An increase in Walmart's starting wage rate to $11 an hour, effective in the February 17, 2018, pay cycle.

Wal-Mart, the nation's largest private employer, has fought in recent years to improve its image in the USA, as it weathered criticism over its treatment of employees.

The wage increase announced Thursday by Walmart benefits all hourly US workers within its stores, Sam's Clubs, eCommerce, logistics and home office. Walmart itself announced similar $1 minimum wage increases in 2015 and 2016. In the previous economic uptick, wage growth peaked in December 2006 at 4.2 percent on a year-over-year basis.

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"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 McMillon. Wal-Mart said it's "early in the process of assessing potential additional investments" it could make. 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 previous year.

The bonuses will be determined on an employee's length of service at the company, Wal-Mart said, and those workers with more than 20 years of experience will qualify to receive $1,000.

CEO Doug McMillon said in prepared statement that recently enacted tax legislation "gives us the opportunity to be more competitive globally and to accelerate plans for the U.S".

The hike will also increase the average hourly pay at Wal-Mart for full-time employees to $14.50 from a current $13.85.

Walmart said hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters, will benefit from the wage increase. Parents who adopt kids will get the same benefit, along with $5,000 to help cover the costs. The retailer has spent about $2.7 billion to increase wages over the past few years. That irks some economists, who say the federal level has failed to keep up with inflation and productivity.

But raising wages is something you could argue Walmart needed to do even in a less-favorable tax environment.


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