Wal-Mart workers will get a pay increase and a bonus along with other benefits
Wal-Mart Stores Inc. said Thursday that it will use savings from the tax bill signed into law in December to reward its workers with extra pay, and even offer one-time $1,000 bonuses—but only employees with at least 20 years of service will qualify.
The retail giant said it will increase the starting wage for hourly associates to $11, effective during the Feb. 17, 2018 pay cycle. Economists and campaigners for a living wage have argued that workers need at least $15 an hour to cover their living costs.
Wal-Mart Chief Executive Doug McMillon announced the move in a memo posted on the company blog that the tax changes give the company “an opportunity to accelerate a few pieces” of planned investments.
“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 McMillon in a separate statement.
Wal-Mart has also expanded paid maternity leave to 10 weeks and will offer six paid weeks of parental leave to full-time hourly associates. Salaried employees will get six weeks of paid parental leave as well. Finally, the retail giant will provide a benefit of $5,000 for full-time hourly and salaried associates to help with adoption fees.
The benefits are expected to impact one million workers.
Wal-Mart expects the cost of the wage increase to be $300 million incremental to what’s included in its next fiscal year plan. And about $400 million will be applied to the current fiscal year ending Jan. 31, 2018 for the bonus payments.
Wal-Mart will provide additional details when quarterly results are released on Feb. 20. The company did not immediately respond to questions about how many workers have 20 years of service.
Moody’s calls the new benefits announcement a “credit positive deployment of money.”
“Investing in employees is beneficial on multiple fronts, including reductions in turnover, as well as potentially enhancing the store experience for customers, which in the current shifting retail environment, is critical for any brick-and-mortar retailer,” said Charlie O’Shea, Moody’s lead retail analyst.
Wal-Mart shares are up 0.6% in Thursday trading, and up nearly 17% for the last three months. The Dow Jones Industrial Average DJIA, +0.81% is up 11% for the past three months and the S&P 500 index SPX, +0.70% has gained 8.1%.