Walmart recently announced a long-sought wage hike thanking the recent tax reform for creating so many “opportunities.” The company added that the recent tax-cut package will surely benefit the company more than an army of hourly employees.
After the announcement, experts have been wondering if Walmart’s decision is part of a growing trend following the Republican Party’s controversial tax plan overhaul. Other companies may follow suit and raise wages.
If that is the case, we could witness a larger consumption and economic growth rates. It could also mean that the government debt will no longer have to grow to sustain the economy.
Walmart announced that entry level employees will see their hourly wage rise from $9 to $1 starting next month. Employees will also be awarded with a one-time bonus for their service. For instance, working at the retailer for 20 years will get a $1,000 bonus.
The wage hikes and the bonus program will cost the company an extra $700 million in labor costs, but the cash had been already budgeted after the tax reform passed.
Walmart’s Decision Met with Criticism
However, not everyone was happy with the announcement. Critics noted that old employees would be better off with an increase in their wages than being awarded an one-time bonus of $1,000.
What’s more, the recently unveiled wage hike would just match the minimum wage in some states. And Walmart’s decision was taken while the labor market has grown increasingly competitive, with employees having more employment opportunities.
Walmart made the wage hike announcement hours after saying that it would shut down more than 60 Sam’s Clubs.
Walmart is not the only U.S. company to use the tax cuts in a way that benefits its employees while making the whole thing public. Other companies will be pressurized both internally and externally to follow suit. This could help solve – at least temporarily – a big problem for the U.S. workforce: stalling wages.
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