Walmart is among the high profile companies touting year-end employee bonuses as a positive outcome of the new tax law championed by President Trump. However, critics of the new law have warned that it is a “ticking time bomb” that will monkeywrench an economy that is already doing quite well, and Walmart’s recent closure of its 63 Sam’s Club stores could be Exhibit A in that argument.
Bonuses and pay raises tell part of the new tax law story…
First, the good news: as of this writing, Walmart is still featuring a January 11 press release on its newsroom web page, under the headline “Walmart to Raise U.S. Wages, Provide One-Time Bonus and Expand Hourly Maternity and Parental Leave.”
The press release outlines how “associates in the U.S. will share in tax savings” as a consequence of the new tax law.
Walmart received a generous helping of good publicity for the announcement, chief among them the provision of a one-time bonus of $1,000. However, on closer reading of the press release the $1,000 applies only to associates with at least 20 years of service, with lesser amounts provided to others.
A little more straightforward is a raise in the company’s starting wage to $11 per hour, beginning in mid-February. However, the press release clarifies that other wage increases have already been planned for 2018.
Other benefits may have also been in the works before the new tax law took shape. Among those, Walmart cites “an expanded parental and maternity leave policy” for full-time hourly associates and salaried associates, as well as a total of $5,000 in adoption benefits.
In fact, just about one year ago, on January 20 2016, Walmart announced a pay increase for more than 1.2 million associates at Walmart U.S. and Sam’s Club, an initiative the retail giant called a $2.7 billion “investment in workers.” In that light, the new jump to $11 loses a good deal of its impact.
…but there’s more to the story…
If you caught that thing about Sam’s Clubs, you’re on to something.
In last week’s employee benefits announcement, Walmart specifically included Sam’s Club staffers in the $11 per hour starting wage.
The company plans to convert about 12 of the locations to fulfillment centers, as part of a broader response to the growth of online shopping. Presumably some of the newly laid-off workers will find jobs there.
Still, the move disrupts life for approximately 9,450 people employed by Sam’s Clubs up until last week.
Sam’s Club employees aren’t the only ones losing out to Walmart’s broader restructuring plan.
On January 12, Bloomberg reported that the company is also cutting the positions of approximately 3,500 salaried co-managers.
The cuts were not previously made public. They come about about as the company adds about 1,700 positions under the title of assistant manager, which reportedly pays less than co-manager.
According to Bloomberg’s source, the laid-off co-managers are eligible to apply for other positions. No word yet on whether or not any of those positions involve the same pay and benefits.
More trouble for Trump
TriplePundit has previously noted that mass layoffs are a feature of American business. Restructuring plans like Walmart’s are usually newsworthy to one degree or another, but they don’t usually reflect directly on presidential leadership.
However, the fact is that Trump himself promised that the new tax law would benefit U.S. workers. Here he is cited by The Wall Street Journal on December 14:
When I say giant, I mean giant,” Mr. Trump said. “Our current tax code is burdensome, complex and profoundly unfair.” He said the new plan would bring “more jobs, higher wages and massive tax relief for American families and for American companies.”
The reality is that Christmas has been over for three weeks now. The drumbeat of bad news about layoffs is piling up, and the White House has been caught flat-footed.
Business Insider, for example, noted that White House officials praised Walmart “even as the company laid off thousands of other workers and closed stores on the same day.”
Here’s a representative tweet from press secretary Sarah Huckabee Sanders, cited by Business Insider:
“Huge news! Truly amazing and inspiring to witness the tax cuts lifting millions of hardworking Americans up.”
Treasury Secretary Steven Mnuchin also credited the new tax law with Walmart’s good news:
“…They will be increasing their minimum wages, issuing bonuses, and expanding family benefits for over a million employees. Walmart is the latest company to make such an announcement as a direct result of the Tax Cuts act.”
As noted by Business Insider, the White House has yet to comment on how the Sam’s Club layoffs and co-manager cuts reflect on the new tax law.
If this is all beginning to sound familiar, AT&T pulled off a similar maneuver earlier this month, when it used the new tax law to mask hundreds of impending layoffs.
Comcast is another company that fired hundreds of workers after crediting the new tax law with creating new jobs.
The blowback is also focusing renewed attention on Trump’s promises to restore U.S. manufacturing jobs. Last week, for example, layoffs at the Carrier factory in Indiana made the media spotlight again.
Trump’s promises to U.S. coal workers and their communities have also fallen flat. Making matters worse, some of the bad news for jobs in the coal industry can be attributed directly attributed to the President’s own appointees at the Federal Energy Regulatory Commission.
More pain is in store for coal miners if Trump follows through on expectations that he will pull the US out of NAFTA, the North American Free Trade Agreement, so stay tuned for more on that.
Photo (cropped): Nicholas Eckhart/flickr.