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Why Walmart raised pay this year

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Of the 3 million workers President Donald Trump said this week are seeing immediate benefits from the new tax law approved in December, roughly one-third work for the same company.

That would be Walmart, the nation’s largest brick-and-mortar retailer, whose workplace practices have stirred controversy over the years.

Th company at the beginning of January said it would be raising the starting minimum wage for all hourly employees to $11 per hour while also distributing one-time bonuses of up to $1,000 to qualifying employees.

The bonuses amount to $400 million, of which $13.9 million is going to Walmart and Sam’s Club employees in Pennsylvania. Outside of state and federal government, Walmart is the largest employer in Pennsylvania, where the company employs 53,000 workers. According to the company, 34,700 Walmart employees in the commonwealth will see a bonus ranging from $200 to $1,000 depending on seniority.

The company also rolled out expanded parental and maternity leave offerings, as well as new adoption benefit plans to help parents with the fees typically accrued in the adoption process.

According to Philip Keene, a spokesman for Walmart’s northeast operations, the tax bill accelerated plans the company has had for some time. "This is sort of a continuation of a broader strategy we’ve had to invest in people," said Keene.

Keene pointed to the new regional training academies like one opened in Springettsbury Township last February, as well as a six-month training course called Pathways that reward staff with a raise upon completion. 

When the cuts were signed into law in December, said Keene, Walmart executives began asking how to continue its investments in human capital.

"How do we accelerate the plan we’ve had all along? How do we do more? How do we invest those dollars in the business? The first decision we made is we’ve got to invest in our people," he said.

The bonuses are based on an employees's tenure with Walmart. Those who have worked less than two years with the company - the lowest bracket - get a bonus of $200. Those who have worked over 20 years with the company get the highest bonus of $1,000.

According to Keene, the bonus structure is designed to reward employees who won’t be affected by the $11 an hour minimum wage because annual raises and evaluations have already put them above that level, a move that addressed concerns Keene said the company had heard after previous across-the-board raises.

"What we heard internally was there was some folks who were concerned with the compression. If you came in and started with us five years ago and moved your way up and got good [employee evaluations], now the floor is closer to you than it used to be," said Keene.

The wage increase could largely be seen as inevitable for Walmart. The minimum wage in Pennsylvania is $7.25 - same as the federal level - but 18 states welcomed minimum wage increases at the start of 2018, including New York and California. As noted by the office of Gov. Tom Wolf, Pennsylvania is the only state among its neighbors not to have raised its minimum wage since the federal minimum rose in 2009. 

Pressure could also be coming from competing big-box stores like Target, Costco and Lowe’s. According to a CNBC analysis of compensation among the nation’s 20 largest retailers last fall, Walmart ranked ninth with average hourly wages of $9.21.

But remaining competitive as an employer, said Keene, takes more than just a dollar amount. The company also recently announced expanded paid maternity leave of 10 weeks and six weeks paid parental leave. "Some have said we haven’t done the research yet, but others have said we’re near the top of the list for that benefit," said Keene.

One of the lesser-sung benefits Walmart is rolling out alongside the bonuses and wage increases are adoption benefits. The company will now offer up to $5,000 in benefits per child to employees who are in the adoption process, money that can be used to cover agency and legal fees. According to the Department of Health and Human Services, a private agency adoption can cost between $20,000 and $45,000.

"So we feel like, if you're going to start a career in retail somewhere, we’re a very competitive place to look," said Keene.

As the company rolled out news of the bonuses and wage increases, regional market managers like Randy Mummert witnessed employee reactions firsthand.

Mummert oversees 10 Walmart locations in York and Lancaster counties. He estimated the company employs between 2,300 and 2,500 people at those 10 locations. Bonuses will be distributed during the Feb. 17 pay cycle, said Mummert, with wage increases taking effect at the same time.

"It was really exciting to see the associates see how the company recognizes the hard work the associates do and how it makes a difference that, as we take care of associates as they build long-term careers with us, what it pays for by taking care of customers," said Mummert.

 

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Gillian Branstetter

Gillian Branstetter

Gillian Branstetter covers health care news for the Central Penn Business Journal. Email her at gbranstetter@cpbj.com.

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