Economy

Walmart will increase its starting wage to $11

Walmart will increase its starting wage to $11

(Today, new hires start at $9 and move up to $10 after completing a training course.) Walmart has been criticized by organized-labor advocates for its pay rates, and has been a frequent target of a union-backed campaign to raise the minimum wage to $15 an hour.

Walmart also announced it would increase parental and maternal leave benefits and give eligible employees a one-time cash bonus for as much as $1,000.

Walmart says the wage increase benefits all hourly USA workers within its stores, including Sam's Club, its website, and logistics.

Parental leave has been another area in which retailers including Target and Ikea have been trying to offer better benefits.

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 a year ago, with plans to increase it to $15 by 2020.

In all, more than 1 million Walmart employees will benefit from the bonuses and wage changes.

CEO Doug McMillon said in prepared remarks that it would be "clear and consistent" for the company to put more money toward goals such as lower prices and technology upgrades.

More news: Google acquired a United Kingdom startup that turns mobile screens into speakers

While Walmart credits the wage increase and parental leave reform to "opportunities" created by the recent tax reform law, the reality may be a bit more complicated. It will range from $200 to $1,000 depending on workers' length of employment with Walmart. Walmart will now provide full-time hourly associates with up to 10 weeks of paid maternity leave and six weeks of paid parental leave.

Along with the headline unemployment rate, a broader measure of joblessness that includes discouraged workers who have largely stopped job-hunting, as well as those only able to find part-time jobs, stood at 8.1 percent at the end of 2017.

Walmart said hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters, will benefit from the wage increase.

Walmart is positioning its latest wage increase as a response to tax reform passed late previous year that could provide the retailer with a windfall to share, thanks to a significant reduction in the corporate tax rate. Over the past several years, Walmart has been taking a number of steps to leave behind its reputation as a low-wage employer.

The company also plans to create a new benefit to help associates with adoption expenses. About a dozen banks have said they will raise their minimum wages. With the nation's unemployment rate now at almost 4%, labor markets around the country have grown tight, and at least some employers feel wage increases are necessary to attract and retain their best workers.

The company said the new initiatives will add $400 million in costs to the current fiscal year and $300 million to the next fiscal year. But, even in the short term, they claim that companies will also share some of their higher after-tax profits with their workers.

The employee bonuses are one-time, up to $1,000 per worker, and are based on seniority.


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