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Walmart announces raises, bonuses — then closes 63 stores without notice

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Walmart announces raises, bonuses — then closes 63 stores without notice

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Mel Evans AP file
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Walmart announced on Thursday it would raise starting wages for hourly employees to $11 an hour beginning next month, and will give some of its hourly workers one-time bonuses that could be as high as $1,000. In total, more than a million employees could benefit, the company said.

The goodwill generated by that announcement, however, was quickly dampened by reports that Walmart would be closing 63 Sam's Club stores across the country — some with no advance notice.

Walmart president and CEO Doug McMillon credited the recently passed corporate tax cuts for the salary hikes, saying, "Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S."

McMillon said Walmart will give onetime bonuses to hourly workers who already earn more than $11. The amount will be based on employees' length of service with the company, starting at $200 and going up to $1,000 for workers with tenures of 20 years or longer.

Walmart said the wage increases will cost $300 million, and the bonuses will cost $400 million.

"The new law will create some financial benefit for the company," Walmart said in its statement, saying it was "early in the process of assessing potential additional investments," and that it would provide additional details next month when it announces quarterly earnings.

Since the passage of the Tax Cuts and Jobs Act, a number of companies announced employee bonuses, including NBC News' parent company Comcast, plus AT&T, JetBlue and a host of financial institutions including Bank of America and Wells Fargo.

Policymakers are divided on how much of this largesse is due to the tax cuts, and how much can be attributed to a tightening labor market and low unemployment rate.

"Walmart has made similar announcements in the recent past … even when no tax reform could have affected its decision," said Gary Burtless, an economist with the Brookings Institution.

The new Walmart employee wage increase follows two earlier pay hikes the retailer implemented in 2015 and 2016 that raised hourly worker pay to $9 and $10 an hour, respectively. (Today, new hires start at $9 and move up to $10 after completing a training course.) Walmart has been criticized by organized-labor advocates for its pay rates, and has been a frequent target of a union-backed campaign to raise the minimum wage to $15 an hour.

The federal minimum wage was last raised to its current level of $7.25 in 2009. The Economic Policy Institute estimates that an inflation-adjusted minimum wage would be $11.62 in 2017, although Tsedeye Gebreselassie, senior staff attorney at the National Employment Law Project, said this doesn't take productivity gains into account.

"If you had kept up with worker productivity, it would be closer to $20 an hour," she said.

McMillon also said Walmart will implement additional new benefits for employees by expanding parental leave and helping would-be adoptive parents pay for adoptions. Full-time hourly workers in the United States will be eligible for 10 weeks of paid maternity leave. Full-time hourly and salaried workers will get six weeks of paid parental leave and will be eligible for $5,000 in adoption assistance.

The announcement came ahead of news that Walmart's wholesale unit, Sam's Club, closed several of its members-only stores in order to "better align our locations with our strategy." In many cases, employees arrived at work only to be told that their store had closed down. Shuttered stores were reported across the country, including four in New York and one in Alaska.

Ken Perkins, founder of research firm Retail Metrics, suggested that the Sam's Club closings were a misstep, saying, "The store closures with no notice is a bit out of character for Walmart and not the best way to treat your employees."

Perkins estimated that Walmart could save as much as $2 billion in taxes this year under the new plan.