This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2018/01/11/business/walmart-wages-tax-cuts.html

The article has changed 4 times. There is an RSS feed of changes available.

Version 2 Version 3
Walmart, Citing Tax Cuts, Will Raise Starting Wages and Expand Benefits Walmart’s Bumpy Day: From Wage Increase to Store Closings
(about 7 hours later)
Walmart, the nation’s largest private employer, said on Thursday that it would raise its starting wages, give bonuses to some employees and vastly expand maternity- and parental-leave benefits for its army of more than one million hourly workers. Walmart, the nation’s largest private employer, waded into the bumpy waters of partisan politics on Thursday, announcing that it will use some of its savings under the new tax bill to provide wage increases, bonuses and expanded benefits to its hourly workers.
The retailer said it would use some of the money it expects to save under the recently passed tax bill to pay for the raises and enhanced benefits. The giant retailer, which faces stiff competition for qualified workers in a tight labor market and pressure from unions to increase wages, said it would raise its minimum starting wage to $11 an hour, from $9. It will also expand maternity and family leave benefits, and give bonuses of up to $1,000 to eligible employees.
Walmart said it would increase its starting hourly wage to $11 from $9, and provide one-time cash bonuses of up $1,000 to hourly workers, depending on how long they had been with the company. The wage increase takes effect next month. By tying its pay increases to the tax break it expects to receive, as other large companies have done in recent weeks, Walmart provided support for claims by the Trump administration and Republicans in Congress that the new tax law will benefit not just the wealthy but also working-class Americans.
Enhancing the pay and benefits of its employees is a significant move for a company that has long been criticized for its low wages, unpredictable scheduling of workers and high health care costs. “This law is helping improve people’s lives,” Speaker Paul D. Ryan, Republican of Wisconsin, said in a tweet on Thursday, citing Walmart’s actions.
Walmart, which employs 2.2 million people around the world and is considered a bellwether for compensation in low-wage industries. The increased pay brings Walmart in line with some of its rivals in the retail industry, including Target, which raised its base pay to $11 last fall. But within hours, Walmart had undercut its triumphal message when news leaked that it was closing 63 of its Sam’s Club stores. Sam’s Club, a retail chain offering memberships, was soon trending on Twitter, and labor groups and Senate Democrats seized on the news to question Walmart’s motives and criticize the tax bill as failing to protect low-wage workers.
Although Walmart linked the moves to the tax cuts, it faces increased competition for the most qualified workers as the labor market tightens. The United Food and Commercial Workers International Union, which hopes to represent Walmart’s nonunionized work force, called the wage increase a “public relations stunt” meant to distract from the closings.
The company is also trying to improve customer service in its roughly 4,700 stores around the United States, many of which have shown signs of low employee morale and untidiness. Senate Democrats, citing the closings and a $20 billion stock buyback announced last fall, said in a statement: “The real response of companies like Walmart to the Republican tax bill has been to ensure that its already high-paid executives and wealthy shareholders reap the overwhelming benefit, leaving thousands of workers standing in the cold without jobs.”
The higher wages could also help Walmart burnish its public image as it battles Amazon for online sales, analysts said. With more than one million hourly workers in the United States, Walmart is a bellwether for compensation in low-wage industry. By citing the new tax plan as an impetus for better wages and benefits, the retailer was bound to become a lightning rod in a fiercely ideological debate.
“Amazon has been viewed as a good citizen,’’ said Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm. “Walmart has been viewed as a bad citizen who is getting better.” “They snatched defeat from the jaws of victory,” Scott Galloway, a professor of marketing at New York University’s Stern School of Business, said in an interview. “Walmart made a smart move in increasing wages and investing in human capital. Where they screwed up was politicizing it.”
Walmart said Thursday it was still determining how much it would save as a result of the corporate tax cuts, although the savings are likely to be in the billions of dollars. In citing the pay raises and bonuses, the retailer joined other large companies — including AT&T, Southwest Airlines and Wells Fargo — that have said savings under the tax law provided the impetus for making similar moves. Since President Trump signed the tax law last month, a number of large companies — including AT&T, Southwest Airlines and Wells Fargo — have said they were using the savings to help their employees. On Thursday, Fiat Chrysler Automobiles announced that it would give a $2,000 bonus to 60,000 hourly and salaried employees.
Walmart is the nation’s single largest corporate taxpayer and its federal tax contributions account for almost 2 percent of all corporate income taxes collected by the Treasury. “It is only proper that our employees share in the savings generated by tax reform,” Sergio Marchionne, the company’s chief executive, said in a statement.
Raising the starting wage would cost about $300 million and the bonuses will total about $400 million, Walmart said. Walmart, which is the country’s single largest corporate taxpayer, said in a statement Thursday that it was still determining how much it would save as a result of the new law.
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. Those workers previously received up to eight weeks of maternity leave at half-pay, and were not entitled to parental leave. The change will give full-time hourly workers at Walmart stores the same maternity- and parental-leave benefits as the company’s salaried employees. Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a nonprofit research group, said it was difficult to forecast precisely how much Walmart would save. But based on the company’s average annual United States earnings over the past five years, he said, savings from the cut in the corporate tax rate alone could be roughly $2.2 billion a year, or 40 percent. He said the figure could be higher or lower depending on tax breaks the company might be losing, or new advantages in the treatment of capital investments and other provisions.
The changes in the leave policy are particularly expansive, putting shelf-stockers and cashiers on the same footing as many white-collar, college-educated workers across corporate America. Walmart said the wage increases and bonuses would cost the company roughly $700 million.
“It’s our people who make the difference, and we appreciate how they work hard to make every day easier for busy families,” Walmart’s chief executive, Doug McMillon, said in a statement. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Walmart’s chief executive, Doug McMillon, said in a statement.
The new maternity-leave policy will not apply to part-time workers, who make up a significant percentage of the company’s hourly work force. Still, many economists are skeptical that the tax cut will have a meaningful impact on wages. In an economic research memo released on Thursday, Goldman Sachs wrote that “we expect no significant short-term effect of tax reform on” average hourly earnings.
Goldman predicted that, to the extent that the tax bill would drive up pay, it would do so over time, partly by stimulating the economy and forcing employers to pay more as they competed for workers.
Walmart started the day with a celebratory message, with its early-morning announcement about wage and benefit enhancements. Even some critics were impressed with some of Walmart’s changes — particularly in expanding maternity and parental leave.
Full-time hourly employees will receive 10 weeks of maternity leave and six weeks of paid parental leave. Those workers previously received up to eight weeks of maternity leave at half-pay, and were not entitled to parental leave.
The expanded leave benefits are particularly significant, putting shelf-stockers and cashiers on the same footing as many white-collar, college-educated workers across corporate America.
Our Walmart, a labor group, said in a statement that action on wage increases and maternity leave was a “substantial step, but still falls short of what all Walmart employees need to be able to provide for our families.” Target, a competitor, raised its starting wage to $11 an hour last fall.
In addition to competing for workers, Walmart is trying to improve customer service in its roughly 4,700 stores around the United States, some of which have been criticized for being untidy in the past.
Analysts said the higher wages could also help Walmart burnish its public image as it battled Amazon for online sales.
“Amazon has been viewed as a good citizen,” said Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm. “Walmart has been viewed as a bad citizen who is getting better.”
By Thursday afternoon, though, Walmart was dealing with a backlash over the closing of about 10 percent of its Sam’s Club stores. The retailer said it had planned to inform its thousands of employees first and then announce it. But customers showed up at stores only to find them closed and began posting the news on social media.
There were also reports that workers showed up for work and were informed that their stores were closed.
Walmart said it was planning to close about 50 Sam’s Club stores across the country and retrofit about a dozen others into e-commerce fulfillment centers. It was unclear how many workers will lose their jobs, because the company said it was trying to find the displaced employees jobs at other Sam’s Club stores.
“There is no easy way to communicate to a group of people that their facility is closing,” John Furner, president and chief executive of Sam’s Club, said in an interview on Thursday evening.
Store closings have become a regular occurrence as the retail industry adjusts to shifts in consumer behavior and more people shop online. But because the closings were occurring on the day of the tax cut announcement, they became fodder for critics.
“They should have been taking a victory lap tonight,” said Mr. Galloway, the New York University professor, “and instead they are back on their heels.”