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Finance & Innovation

Walmart Employees Are Getting a Raise — But Still Live in Poverty

Walmart employees have something to look forward to in 2018.

The corporate giant is raising the hourly minimum wage across its stores to $11 from $10, as well as giving out one-time bonuses that will net its longest-serving employees up  to $1,000. The company will also expand its paid maternity leave program to 10 weeks.

The improvements will still not lift full-time Walmart workers above the federal poverty line.

The retailer attributes this batch of employee benefits to the recent corporate tax cut in the US from 35% to 21%.

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“Today, we are building on investments we’ve been making in associates, in their wages and skills development,” Walmart CEO Doug McMillon said in a statement, adding that the tax cut "gives us the opportunity to be more competitive globally and to accelerate plans for the US.”

The nationwide wage increase brings the same wage floor to all employees. Previously, the store had enacted wage hikes on a state-by-state basis to fulfill local and state requirement, according to USA Today.

It also anticipates the growing push for a higher minimum wage throughout the country, driven by the Fight for 15 movement, which seeks to bring a “living wage” to workers across the country so they can attain a normal standard of living.

In recent years, several cities and states across the US increased local minimum wages, including 19 states at the start of 2017, and San Francisco, Seattle, and Minneapolis have already adopted a $15 minimum wage.

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Although the increase at Walmart will be welcomed by employees across its 4,700 stores, $11 an hour translates to roughly $22,000 a year for a full-time worker, below the federal poverty line of $24,600, according to Bloomberg.

But about half of Walmart’s hourly workers are kept on part-time schedules despite asking for more hours, according to the New York Times.

One of Walmart’s chief competitors, Target, lifted minimum wages to $11 an hour in October of last year and plans to lift wages to $15 an hour by the end of 2020.  

Other companies have given out one-time bonuses or increased wages because of the tax cut, USA Today reports.

Both AT&T and Comcast gave out $1,000 bonuses to non-management workers, USA Today notes.

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However, economists say that bonuses are cheaper for companies and less meaningful for employees than permanent wage increases.

Walmart’s one-time bonus will be paid out depending on time served at the company, with those who have been there 20 years or more receiving the full $1,000.

The hourly increase will cost Walmart the brand $300 million, according to Bloomberg, and the additional one-time bonuses could cost $400 million.

The brand is expected to make up for these costs through the tax cut, however.

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Walmart has long been criticized for its labor practices. As the tax cut takes effect, employees will be waiting to see if higher company earnings lead to more meaningful working conditions.

Global Citizen campaigns on the Global Goals, which call for less inequality between and within countries. You can take action on this issue here.