With a lower tax bill in sight, Walmart to raise its US minimum wage
Walmart Stores Inc will raise entry-level wages for U.S. hourly employees to $11 an hour in February as it benefits from last month's major overhaul of the U.S. tax code, the company said on Thursday.
Walmart, the world's largest retailer and private employer, said it would also offer a one-time cash bonus, based on length of service, of up to $1,000, and expand maternity and parental leave benefits.
The pay increase, Walmart's third minimum wage increase since 2015, and bonus will benefit more than 1 million U.S. hourly workers, it said.
Walmart's announcement follows companies like AT&T Inc , Wells Fargo & Co and Boeing Co, which have all promised more pay for workers after the Republican-controlled U.S. Congress passed a tax bill that slashed the corporate tax rate to 21 percent from 35 percent.
President Donald Trump and his fellow Republicans have argued that the corporate tax cut, part of the biggest overhaul to the U.S. tax code in 30 years, will benefit workers and lead to more investment by U.S. companies.
Walmart is likely to save billions of dollars from the new tax bill. Retailers, in general, have one of the highest average effective tax rates because a majority of their operations are in the United States.
It will also help the retailer attract workers at a time when the U.S. unemployment rate is low - currently 4.1 percent - and so competition for low wage workers is rising.
Walmart said the new tax law will create "some financial benefit for the company" and that is it is in the early process of assessing additional investments.
"We are in the early stages of assessing the opportunities tax reform creates for us," President and Chief Executive Officer Doug McMillon said in a statement. The tax law gives the retailer an opportunity to be more competitive globally and to accelerate investment plans for the United States, he said.
Walmart employs about 2.2 million people globally, with more than 1.5 million in the United States, and had total global revenue of nearly $500 billion last year.
The increase in wages will cost approximately $300 million on top of wage hike plans that had been included in next fiscal year's plans, the company said.
The hike will also increase the average hourly pay at Walmart for full-time employees to $14.50 from a current $13.85. The payscale for hourly workers will be from $11 to $24.70 per hour, the company said.
The company raised its minimum wage to $9 an hour in 2015. In 2016, it said employees who finished an internal training program would be eligible for $10 an hour. The retailer has spent about $2.7 billion to increase wages over the past few years.
The company is offering a one-time bonus to full and part-time employees based on their length of service, rising to $1000 for employees with 20 years of service. The one-time bonus will amount to $400 million in the current fiscal year and the company will take a one-time charge in the fourth-quarter of the current fiscal year to account for the charge.
Shares of the company were down 0.52 percent at $99.15 in early trade.