Wal-Mart Raises Hourly Wage to $11 in Wake of Tax Overhaul

Wal-Mart Stores Inc. is boosting its starting hourly wage to $11 and delivering bonuses to employees, capitalizing on the U.S. tax overhaul to stay competitive in a tightening labor market.

The increase takes effect next month and will cost $300 million on top of annual wage hikes that were already planned, the world’s largest retailer said Thursday. The one-time bonus of up to $1,000 is based on seniority and will amount to an additional $400 million. The company is also expanding its maternity and parental leave policy and adding an adoption benefit.

Wal-Mart, the nation’s largest private employer, has fought in recent years to improve its image in the U.S., as it weathered criticism over its treatment of employees. With the wage increase and bonus payment, the company seeks to even its pay gap with resurgent rival Target Corp., while simultaneously sending a high-profile thank you to the U.S. government for slashing the corporate tax rate.

The move comes three years after Wal-Mart last announced it was raising wages, spending $1 billion in 2015 to lift starting hourly pay to $9 and then to $10 the following year -- for workers who complete a 90-day training course. The increase cut into profit and was criticized by some longer-tenured employees as unfair to them.

“We’ve seen wage stagnation for many years, so it’s super important for lower-wage workers to see their wages rise,” said Elise Gould, a senior economist at the Economic Policy Institute. “It’s due to two factors -- state-level increases and a tightening labor market.”