Wal-Mart Stores Inc. said it would raise starting pay to $11 per hour for all its USA employees and hand out one-time bonuses as competition for low-wage workers intensifies and new tax legislation will add billions to the retailer's profits.
The pay increase and bonus will benefit more than 1 million U.S. hourly workers, it said, but the pay increase remains far below the $15 an hour unions and pressure groups say is needed to make up for decades of low growth in retail wages.
Walmart's wage increase will take effect in February.
The increase in wages will cost approximately $300m on top of wage hike plans that had been included in next fiscal year's plans, the company said. Last quarter, the Bentonville, Arkansas-based company posted its strongest US sales gain in more than eight years.
Full and part-time workers at Walmart, the world's biggest retailer, will receive a bonus of up to $1,000 based on their length of service.More news: Who's to blame for SpaceX satellite loss?
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"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. 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. "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 announcement follows a series of similar moves by major corporations that also credited the tax cut with bolstering their businesses.
"A fairer and more competitive tax code will give retailers the ability to modernize stores, invest in their workforce and continue to transform the shopping experience for consumers", he continued. Salaried associates will also receive six weeks of paid parental leave. Job postings at an Amazon warehouse in OH, for example, offer a starting pay of $14.50 an hour.
An expanded parental and maternity leave policy, providing full-time hourly associates in the US with 10 weeks of paid maternity leave and six weeks of paid parental leave. Previously, the company didn't offer any paid leave for them. Full-time hourly and salaried associates will also be eligible for adoption benefits of up to $5,000 per child.
The wage increase comes as Walmart is on a roll. Costco's starting wage is at least $13 an hour while Target is gradually raising its starting hourly wage to $15 by 2020. It has done well and strengthened its hand in online retail as many other retailers have struggled. Walmart's online business is surging.