Coverage: Walmart gives raises, closes Sam’s Club locations

Walmart, the largest U.S. private employer with more than 1 million workers, plans to raise starting wages from $9 to $11 an hour and hand out employee bonuses ranging from $200 to $1,000 while closing 63 Sam’s Club locations.

Abha Bhattarai and Todd C. Frankel of The Washington Post had the story:

With its announcement on Thursday, Walmart didn’t mention the great difficulty employers are having finding and retaining workers in the retail industry.

“Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Walmart’s Chief Executive Douglas McMillon said.

Observers said Walmart almost had to raise wages now if it wanted to keep step with peers such as Target, which late last year raised its starting wage to $11 an hour, with plans to reach $15 by 2020.

“I would’ve been astounded if they hadn’t raised wages,” said Thomas Kochan, a professor at MIT’s Sloan School of Management. “What’s impossible to sort out is how much of this is because of savings from the tax cuts, and how much is because of pressure they’re receiving from employees and labor groups.”

Joseph Pisani and Alexandra Olson of The Associated Press reported that the closings are more than 10 percent of all Sam’s Clubs:

The world’s largest private employer said it was closing 63 of its 660 Sam’s Clubs over the next weeks, with some shut already. Ten are being converted into e-commerce distribution centers, according to a company official who spoke on condition of anonymity because he was not authorized to discuss details of the decision publicly.

He said it was too early to say how many people overall would lose their jobs since some will be placed at other Walmart locations or rehired at the e-commerce sites. Making Change at Walmart, a campaign backed by the United Food and Commercial Workers International Union, estimates that 150 to 160 people work at each Sam’s Club store, meaning the closures could affect about 10,000 people.

Lauren Fitz, 22, said she was at her other job as a church secretary when a colleague texted to say that the Sam’s Club where they both worked in Loveland, Ohio, had closed. Fitz had been pleased earlier to read the news that Walmart was boosting starting salaries and offering bonuses.

Lauren Thomas of CNBC.com reported that the retailer is using the tax cuts to lower prices in its stores:

Some are beginning to speculate Walmart will invest in dropping prices even lower across its stores, something that’s always been key to the big-box retailer’s brand.

“Our sense is WMT will proceed judiciously [with] incremental near-term price investments,” UBS analyst Michael Lasser wrote in a note to clients.

“It’s already been deploying ‘billions of dollars of price investments,'” Lasser said. “Still, the tax change provides fire power in its arsenal to deploy over time. It can now wait & see how the consumable retail landscape evolves [with] the slow rise of hard discounters & the move to online grocery.”

The world’s largest private employer made it clear on Thursday it’s still in the “early process” of looking at the new tax bill, which slashes corporate tax rates to 21 percent, and would provide more details on future investments next month.

CEO Doug McMillon said in prepared remarks that it would be “clear and consistent” for the company to put more money toward goals such as lower prices and technology upgrades.