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Walmart hikes minimum wage, announces layoffs on same day

Reuters  |  NEW YORK 

By Nandita Bose

NEW YORK (Reuters) - on Thursday said it will raise entry-level for U. S. hourly employees to $11 an hour in February as it benefits from last month's major corporate cut and on the same day said it will shut stores and lay off thousands of workers.

The world's largest retailer and private employer, officially called , will shutter 63 of its discount warehouses, or about one tenth of the chain overall, according to a senior company who declined to be named.

Around 50 of those stores will be shut permanently after a review of profitability and up to 12 more will be shut and reopened as e-commerce warehouses, the person said.

Every store employs about 150 workers, bringing the total number of affected jobs to about 7,500, the person said. Many of them will be accommodated in new jobs at the newly opened warehouses and other stores, the said.

Earlier on Thursday, announced the hike, 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 layoffs went unaddressed but the increase attracted praise from the

"is the largest employer in the country and to see them make that kind of effort to over a million workers is a big deal... and I think further evidence that the reform and cut package are having the impact that we had hoped," told reporters on Thursday.

also praised Walmart's decision to raise

of the store closures, hours after the hike announcement, drew some criticism.

"While pay raises are usually a good thing, this is nothing but another from to distract from the reality that they are laying off thousands of workers and the ones who remain will continue to receive low wages," said activist Randy Parraz, of Making Change at Walmart, a and Commercial Workers Union (UFCW) affiliate.

The pay increase, Walmart's third increase since 2015, and bonus will benefit more than 1 million U. S. hourly workers, the company said.

The 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 employees.

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

"Given how low unemployment is, they would have had to hike anyway, the bill just made that move easier," said

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

and Target's new levels exceed the state in all but three states, according to a research note from financial services firm must pay employees slightly more to meet minimum levels in those three states. Eighteen U. S. states increased their on Jan.1 but the federal has been $7.25 since 2009.

Walmart's announcement follows companies like ,

N> and , which have all promised more pay for workers since the Republican-controlled passed the biggest overhaul to the U. S. code in 30 years.

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

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

said the new law will create "some financial benefit for the company" and that is it is looking at additional investments.

"We are in the early stages of assessing the opportunities reform creates for us," and Chief Executive said in a statement, adding the law is an opportunity to be more competitive globally and to accelerate investment plans for the

employs about 2.2 million people globally, with more than 1.5 million in the United States, and had total global revenue of nearly $500 billion last year. Ninety percent of Americans live within 10 miles of Walmart's 4,700 U. S. stores, which sell everything from and clothes to and sports gear.

ONE-TIME BONUS

The increase in will cost approximately $300 million on top of hike plans that had been included in next fiscal year's plans, the company said.

group OUR called Thursday's announcement a "substantial step" but said it still fell short of what all employees need to provide for their families. "If Target can raise to $15, most certainly can afford $15 an hour and full-time hours," Carolyn Davis, a 10-year worker from North Carolina, was quoted saying in a note from the group.

raised its to $9 an hour in 2015. In 2016, it said employees who finished an in-house training program would be eligible for $10 an hour. The retailer has spent about $2.7 billion to increase over the past few years, which has helped in improving customer service and keeping its stores clean.

The hike announced on Thursday will also increase the average hourly pay for full-time employees to $14.50 from a current $13.85. The payscale for hourly workers will be from $11 to $24.70 per hour.

The one-time bonus will amount to $400 million in the current fiscal year and the company will take a one-time charge in the fourth-quarter of the current fiscal year to account for the charge.

Shares of the company ended up 0.35 percent at $100.02 on Thursday.

(Reporting by in New York, Additional reporting by in Washington D. C.; Editing by and Bill Rigby)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, January 12 2018. 03:43 IST
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