UPDATE 4-Lower taxes and tight labor market prompt Walmart to hike U.S. wages

From Reuters - January 11, 2018

NEW YORK (Reuters) - Walmart will raise entry-level wages for U.S. hourly employees to $11 an hour in February as it benefits from last months major overhaul of the U.S. tax code and competes for low wage workers in a tight labor market.

The worlds largest retailer and private employer, officially called Wal-Mart Stores Inc, announced the hike on Thursday, saying 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, Walmarts third minimum wage increase since 2015, and bonus will benefit more than 1 million U.S. hourly workers, it said. Separately on Thursday, Walmarts Sams Club unit said on Twitter that it was shutting a series of stores following a review. It did not say how many.

The Walmart wage hike, taking minimum pay up from the current $10 an hour after in-house training, is aimed at helping the company attract workers at a time when the U.S. unemployment rate is at 4.1 percent, a 17-year low, making it harder to attract and retain minimum wage employees.

Walmart is likely to save billions of dollars from the new tax law, which slashed the corporate tax rate to 21 percent from 35 percent, and the wage hikes will cost the retailer only a fraction of those gains, analysts said.

Given how low unemployment is, they would have had to hike wages anyway, the tax bill just made that move easier, said Edward Jones analyst Brian Yarborough.

Rival retailer Target Corp raised its minimum wage to $11 in September, and said it would raise its minimum wage to $15 by 2020.

Walmart and Targets new minimum wage levels exceed the state minimum wage, in all but three states, according to a research note from financial services firm BTIG. Eighteen U.S. states increased their minimum wage on Jan.1 but the federal minimum wage has been $7.25 since 2009.

Walmarts announcement follows companies like AT&T Inc, Wells Fargo & Co and Boeing Co, whichhave all promised more pay for workers since the Republican-controlled U.S. Congress passed the biggest overhaul to the U.S. tax code in 30 years.

Democrats have slammed the legislation, which also temporarily reduced tax rates for most individuals, as a giveaway to the wealthy that will widen the rich-poor income gap. President Donald Trump and his fellow Republicans have argued that the corporate tax cut will benefit workers and lead to more investment by U.S. companies.

Retailers, in general, have one of the highest average effective tax rates because a majority of their operations are in the United States.

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.



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