Walmart Raises Wages
Electronics Department at Wal-Mart; Credit: John Flournoy/McGraw-Hill Education
Last month, Congress passed a controversial new tax bill. This bill angered many Democrats because it will raise taxes for millions of middle-class families. Republicans, on the other hand, applauded the bill because it gives big tax breaks to both small and big businesses. Many Republicans believe that when companies pay less in taxes, they are able to pay their employees more, and therefore, everyone benefits.
Love it or hate it, the new tax bill is already affecting change. The giant retail chain Walmart has long been criticized for not paying its employees enough and for poor worker conditions. Last week, however, Walmart announced that, as a result of the new tax legislation, it will now be able to begin addressing some of these problems. But the relationship between the new tax bill, companies, and the economy is more complicated than it initially seems.
A Mixed Message
Walmart has said that it will raise starting wages from $10/hour to $11/hour for new employees (the federal minimum wage is $7.25/hour), and even offer one-time bonuses to some workers: up to $1,000, for people who have been employed with the company for twenty years or more.
The company has also improved benefits for employees who are new parents. Before, full-time employees who are paid by the hour received only half pay while they were off on maternity or parental leave. But now, full-time hourly employees will receive full pay for up to ten weeks of maternity leave and six weeks of parental leave.
This all sounds great, but the news wasn’t all positive. At the same time, Walmart also announced that it will be closing 63 Sam’s Club stores nationwide. It’s not clear how many Sam’s Clubs employees will be laid off as a result. But Walmart is encouraging them to look for jobs elsewhere within the company.
A Common Story
Other companies are making announcements that are similar to the one made by Walmart. Last month, AT&T’s CEO claimed that the new tax bill would stimulate the economy and help create new jobs. To that end, the company recently announced that, thanks to the new bill, it would be giving one-time, $1,000 bonuses to 200,000 employees. However, at the same time, AT&T is also laying off thousands of workers, including nearly 12 percent of its technicians. The terminated employees will be given only three weeks of severance pay.
Comcast is a similar story. The telecommunications giant also pushed hard for the new tax reform bill, saying that its passage would enable the company to create thousands of new jobs. In fact, it announced that it would be awarding one-time, $1,000 “special bonuses” to 100,000 employees. However, shortly before Christmas–despite the passage of the tax bill–Comcast fired about 500 salespeople. Though the company calls this a routine “reorganization,” it has not yet shared plans to re-hire any of its former employees.