Some Thoughts On The Walmart Minimum Pay Increase

One of the top news items today was an announcement by Walmart that it plan to raise the minimum pay for some employees to $11 an hour. US President Donald Trump is already touting this move on Twitter as “a result of our TAX CUTS & JOBS ACT!”. I think this is genuinely good news for Trump and the Republicans. It also is good news for wage rates more generally.

Here’s what Walmart did: the company announced that it will increase its starting wage for US-based hourly employees to $11. The retailer also said it would expand maternity and parental leave benefits. Walmart is also going to pay cash bonuses totalling some $400 million, with individual employees receiving up to $1,000. Bonuses will be based on seniority, with those who have worked for Walmart for 20 years getting the full $1,000 bonus. Walmart has about 2.1 million employees worldwide. 1.4 million of those are in the US.

While this payout to employees is clearly a political move by Walmart – and I will have more on that later — the most important takeaway here is that Walmart feels confident enough in its future business prospects to both increase wage rates and pay out cash bonuses of $400 million. And this is true even though Walmart was trounced by Amazon in the online holiday season,

In short, while retailers have been struggling, so much so that retail bankruptcies alone were responsible in increasing bankruptcy filings at the end of last year, the largest American retailer is hugely confident in its future and lifting employee payouts as a result. This is bullish. To the degree we see Walmart as an economic bellwether — and given its size, we should — the Walmart move saying that the US economy is doing well and likely will continue to do well over the neat term.

Here in Washington, DC, a lot of talk has been about the politics. What you have to remember on the wage rate is that there has been a campaign to raise wages to $15 an hour for the past three years. That’s double the federally-mandated minimum wage rate of $7.25 an hour. So Walmart’s boosting its minimum pay from $9 (and $10 after a training program) to $11 an hour is a big deal. Walmart operates and competes for lower-skilled labor everywhere in the United States. They are essentially putting a floor on wage rates that a wide panoply of companies that compete for the same workers will feel compelled to match. So while we’re not talking about $15 an hour, this is still a big win for Walmart politically then.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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