Walmart CEO says ‘Happy New Year’ with pay raise for employees

Discussion
Photo: Walmart
Jan 11, 2018
George Anderson

Walmart CEO Doug McMillon announced plans today for the retailer to raise the minimum wage it pays to all hourly employees from $10 to $11. Walmart also plans to pay a one-time cash bonus of between $200 and $1,000 to all eligible employees while expanding its maternity and parental leave benefits. The changes will affect more than one million hourly associates in the U.S.

Mr. McMillon credited the recent passage of a lower corporate tax rate by Congress and President Trump as the impetus for the retailer’s largesse.

“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 Mr. McMillon in a statement. “However, some guiding themes are clear and consistent with how we’ve been investing — lower prices for customers, better wages and training for associates and investments in the future of our company, including in technology.”

Walmart plans to pay the one-time bonus — a total cost of $400 million — during the current fiscal year, which ends on Jan. 31. The increase in hourly wages will begin on Feb. 17 and add $300 million to the retailer’s payroll costs in the next fiscal year.

Walmart’s expanded benefits will provide for 10 weeks paid maternity leave and six weeks for parental leave. The parental leave will cover both hourly and salaried employees.

The company will also provide up to $5,000 in financial assistance to associates looking to adopt a child. The adoption benefit may be used to cover adoption agency fees, translation and legal costs.

The National Retail Federation (NRF), which strongly backed passage of a lower corporate tax rate and hailed the eventual passage of the legislation, played up higher wages for employees as one of its potential benefits.

Back in October, David French, NRF senior vice president for government relations, pointed to an analysis by the association that found the average “C” corporation, many of which are retailers, paid the average worker nearly $4,700 less per year because of the previous 35 percent corporate tax rate. One of the debates around the legislation, prior to passage, was what percentage of newly found funds would be passed on to low-wage workers and how much would end up being dropped to the bottom line, used to buy back shares, etc.

DISCUSSION QUESTIONS: What is your reaction to Walmart’s decision to raise hourly worker wages, pay a one-time bonus to employees and expand maternity and parental leave benefits as a result of the recent lowering of corporate tax rates in the U.S.? Will other retailers follow suit in short order?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Walmart is crediting a tax break, which is true, but the fact that Walmart is hitting on all cylinders, driven by tech, is certainly not hurting."
"This is a great move and will be advantageous for them as talent is critical to a company of their scale."
"The old adage is that if you provide an exceptional or improved employee experience, that will translate to a superior customer experience."

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22 Comments on "Walmart CEO says ‘Happy New Year’ with pay raise for employees"


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Max Goldberg
Guest

I salute Walmart for taking these positive steps towards its employees and urge other retailers to follow suit. That said, even more of the gains Walmart will receive from the tax bill should be given to employees. $11 an hour is not a living wage.

Ryan Mathews
BrainTrust

Max, could agree more. Assuming a 40 hour work week, and that is a big assumption when we are talking about retail workers, that’s a $440 a week gross, or $22,880 a year — BEFORE taxes and withholdings. Not sure how many BrainTrusters would like to raise a family on that kind of money.

HY Louis
Guest
11 months 6 days ago

A salute and hooray for Walmart. These are things we have heard in the past yet led to no meaningful improvement for employees. You will find that employees outside the USA won’t be getting the same benefits. It’s only a USA PR stunt. With unemployment at 4%, it might as well be zero percent. Rising wages are a result of low unemployment, however, Walmart is more than happy to appear generous. Walmart gives profit sharing bonuses anyway. Is this in addition? Or has the normal bonus been given a different label?

Bob Amster
BrainTrust

This opinion borders on the political. The decision and the move are refreshing as I think they are atypical of most businesses and I think is indicative of a new-thinking Walmart. Investing in the future by retaining your trained employees seems obvious to the outsider looking in. I’m sure President Trump will be the first to take credit.

Brandon Rael
BrainTrust

We should applaud retailers such as Walmart to provide incentivization and a more livable wage. Retail is one of the driving forces of our economy, if not the largest, and the store associates who are on the front line should be compensated accordingly. Any customer-facing role is demanding, full of long hours and pressures. Providing financial incentives will only help Walmart and other retailers in the long run, as their associates will be motivated to provide an exceptional service to their clients.

The old adage is that if you provide an exceptional or improved employee experience, that will translate to a superior customer experience.

Paula Rosenblum
BrainTrust

The fact that a tiny portion of the windfall corporations like Walmart are getting will go to minimum wage employees is meant to make us feel like anything is actually trickling down. Trickle is the right word.

Sorry … this isn’t bordering on political, it IS political. It’s a PR sham.

Jon Polin
BrainTrust

Walmart is crediting a tax break, which is true, but the fact that Walmart’s business is hitting on all cylinders, driven by tech investments, is certainly not hurting. Other retailers may see the same tax breaks but have businesses that are hurting.

Seth Nagle
BrainTrust

It’s a good start and I expect their grocer competitors to follow to keep their employees happy, in doing a quick search I found that large grocers that compete directly with Walmart currently pay cashiers around $9.79 to $10.50. an hour.

Over the past 12 months, Walmart has worked hard on rebranding their image of how they treat their employees, from payments in advance to providing financial assistance for adopting. Look for similar programs to be announced from other grocers shortly.

David Livingston
Guest
11 months 7 days ago

I think its more of a labor shortage issue than the benefit of the lowering of tax rates. Shareholders should have first crack at the tax savings from buy backs and dividend increases. A buck an hour or a $1,000 bonus doesn’t go far.

Joy Chen
BrainTrust

Walmart took advantage of the corporate tax reform to position a positive change in their HR policy for their employees. This is a great move and will be advantageous for them as talent is critical to a company of their scale. Other companies, particularly ones of this size and with a non-salary employee makeup, should consider a move similar to Walmart.

Neil Saunders
BrainTrust

Regardless of what one thinks of this administration and the shoddy tax bill that it pushed, reducing corporate tax is morally correct and economically prudent.

We have already seen a raft of companies giving bonuses and raises off the back of it. Sure, not all of the windfall will go to employees, but some will and that can only be a good thing.

The bottom line is that I would rather companies keep more of the profit they earn than have it absorbed by a bloated, incompetent and ineffectual federal government.

Gene Detroyer
BrainTrust

Historically, when the unemployment rate hits about 4 percent, the country is at full employment. When the country hits full employment, there is more competition for labor and wages and benefits go up.

The country is in a labor shortage mode and will be for the next decade or more. Boomers are leaving the workforce at the rate of 250,000 per month. They are being replaced at the rate of about 150,000 per month. Population growth in the U.S. is about 0.7 percent annually.

For Walmart the competition isn’t only for customers, it is for workers.

Joan Treistman
BrainTrust

I’m happy for employees who see a raise in wages and benefits. I’ll be happier to see more of the same within Walmart and other companies. Perhaps Walmart’s decisions which get high level coverage will influence other companies to do the same and even more. If corporations have to compete to get their job openings filled there will be more improvement of salaries and benefits. Public awareness of improvements in some companies may influence other organizations. The tax cut prevents unwilling executives from falling on that line of excuse.

Shep Hyken
BrainTrust

Walmart is taking steps in the right direction. Even a small raise or bonus can help a family that is working with earners bringing in lower or minimum wages. The statement that Mr. McMillon makes is that there is hope that Walmart will take some of the money it saves in taxes and apply it to lower prices for customers and better wages and training for employees (and more). That could add more to the bottom line than just the savings.

Dan Raftery
Guest

Hooray to Walmart for recognizing the importance of their employees. It looks to me like variety has improved, inventory has been reduced and POS has been upgraded. Nice to see the investment in the people side too.

Brian Kelly
Guest
11 months 7 days ago

This is a brilliant move. Brand Walmart is on a roll (increased sales and profit) due in large part to the store improvements that make the experience much more pleasant. Of course, the reality of its history with associates is problematic. Concocting this pay raise due to the tax bill is well played.

Not all retail brands face the same issues as does Walmart. Pay raises are not necessary in all situations. Aside from buying jet.com, Walmart bought more than 20 tech companies to improve the customer experience regardless of channel. It’s enjoyed the former Target/J.C. Penney CMO as a consultant which has really improved the brand voice. These investments are being employed against a strategy deftly managed by McMillion. The turnaround of Walmart is a wonderful case study. Most feel BIG brands can’t be turned.

With Joly and Dillion, he is one of the few rockstar retail CEOs.

Ricardo Belmar
BrainTrust

While this is a wonderful action taken by Walmart, to claim that this is the outcome of the tax reform when it only accounts for a small trickle of the total tax savings dollars Walmart will receive is a PR tactic. It’s best to look at this as yet another example of Walmart trying to invest in their employees as well as technology to improve the shopping experience in their stores.

While great news for their employees, we’ve seen restaurant chains offer larger increases than this from smaller revenue amounts, so we shouldn’t start excessively celebrating. Take the PR with a grain of salt and watch out for what Walmart does next with the massive tax savings their going to get — it’s not going to their employees apart from a small dollar figure.

Craig Sundstrom
Guest

The question is naïve, since it assumes this is “a result of the recent lowering of corporate tax rates.” That is, of course, utter nonsense, since if we follow the usual mantra of “benefitting shareholders,” any increase in post-tax net should have been returned as increased dividends. But it makes for good press and scores brownie points with politicos … at least with one of them.

Lee Peterson
BrainTrust

Wow, trickle down come to life. Reagan’s probably jumping for joy in his grave right now. Walmart’s starting to look like a real 21st century player, aren’t they? Investing in tech and tech thinking, really listening to their customer, building Walmart “Academies” to train/re-train employees, excellent BOPIS, on and on. Finally, someone drew a line in the sand and is competing with the 900 lb gorilla!

Harley Feldman
BrainTrust

Walmart is looking out for its employees. They realize employees provide the essence of the company, and they are the primary interface to Walmart’s shoppers. Happy employees present a better service to the shoppers. In addition, turnover is costly and works against a consistent customer experience. Other retailers will follow suit as they are competing to attract associates in the same labor pool as Walmart.

Min-Jee Hwang
BrainTrust

Walmart’s move is a good start and I hope to see announcements from other retailers soon. $1 more per hour and a bonus of a few hundred dollars will only have a small impact on Walmart’s coffers and employee bank accounts. But maybe it will encourage others to boost pay as well.

James Nichols
Guest

Not at all what you’d expect from a retail org. Bravo! What’s great about a pay rise as well is that so much of it will be spent in the store. So people get more and Walmart gets more. And the multiplier effect of dollars in the economy takes off!

wpDiscuz
Braintrust
"Walmart is crediting a tax break, which is true, but the fact that Walmart is hitting on all cylinders, driven by tech, is certainly not hurting."
"This is a great move and will be advantageous for them as talent is critical to a company of their scale."
"The old adage is that if you provide an exceptional or improved employee experience, that will translate to a superior customer experience."

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