The largest private employer in the United States, Wal-Mart, announced on Thursday that it is raising its starting hourly wage to $11 while also giving bonuses to its workers. The wage hike takes effect in February and will cost $300 million in addition to annual wage hikes that were already planned, according to the world’s largest retailer. The one-time seniority-based bonus of up to $1,000 will amount to an additional $400 million. Wal-Mart will also reform its maternity and parental leave policy and add an adoption benefit. A company press release credited tax reform for the wage increase and benefits.

Wal-Mart seeks to even its pay gap with rival Target Corp. by capitalizing on the tax reform package signed by President Donald Trump in December. Wal-Mart’s announcement came three years after it last announced a wage raise: in 2015, the chain spent $1 billion to increase its starting hourly pay rate to $9 and then to $10 the following year for workers who complete a 90-day training course.

Since 2015, a number of states began enacting minimum-wage laws, which means that a sizeable number of Wal-Mart’s 4,700 stores in the U.S. were already paying $11 per hour, according to a company spokesman. Workers in the District of Columbia, California, Washington, and Massachusetts were already earning at least $11 an hour. Next year, Arizona, Colorado, Maine, New York, and Oregon will reach the same level. A total of 18 states have increased minimum pay this year.

Shares for Wal-Mart were little changed by the news, opening at $99.70, it was trading at $100.40 by mid-afternoon. Last year, Wal-Mart stock advanced 43 percent in 2017.

Wal-Mart joined more than 100 corporations, including Boeing and Alaska Air, that have given bonuses and benefits in response to the Republican tax package that cut the corporate tax rate from 35 percent to 21 percent.

On the downside for Wal-Mart, its Sam's Club affiliate announced on Thursday store closings and layoffs. Walmart is abruptly closing 63 Sam's Club locations across the United States. Some were closed on Thursday, while others will close later. According to reports, many employees were not advised in advance of the closings. Signalling a move against its rival, Amazon, 10 of the stores to be closed will be converted into ecommerce distribution centers. A statement at the Sam's Club Twitter account noted, "After a thorough review of our existing portfolio, we’ve decided to close a series of clubs and better align our locations with our strategy. Closing clubs is never easy and we’re committed to working with impacted members and associates through this transition."



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Martin Barillas is a former US diplomat and the editor of Spero News.

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