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Large retailers already anticipating benefits of new tax laws

This week, large retailers made announcements following the recently passed tax cuts. Walmart raised salaries for hourly workers to $11 per hour and announced one-time bonuses to 1,000 eligible employees, but it also announced the closure of 63 Sam’s Club stores and replacement of 3,500 store managers with lower-paid positions. Michael Corkery of The New York Times joins Hari Sreenivasan for more.

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  • HARI SREENIVASAN:

    A number of American companies are handing out bonuses and raises to workers as they expect to reap the benefits of the recently passed tax cuts. This week, Walmart joined in saying they will increase the starting pay for hourly workers to $11 and provide one time bonuses of as much as $1,000 to eligible employees. But the news was mixed because the retail giant also said it would close 63 of its Sam’s Club stores and cut 3,500 store managers. Those jobs would be replaced by lower paid positions. For some analysis, I am joined by Michael Corkery of The New York Times. So 11 bucks an hour. That’s a good thing for lots and lots and lots of the largest private employer in the country, right?

  • MICHAEL CORKERY:

    It is. It’s a big move. You know, labor groups have been on Walmart’s case for years to raise that starting wage. They moved to $2. It’s, you know, some would say, they’re playing catch up to where other retailers are – Target is at $11 and they moved that up in September. But nonetheless, they are the largest private employer in the U.S. It’s more than a million people. It’s a lot more money in their pockets. But as you mentioned, the news, which was generally received positively, was somewhat complicated and marred by on the same day that they’re announcing this raise. They also closed 63 Sam’s Club stores. So there are critics who saw it as a given here and taking away there. What should have been a great news day for Walmart turned into a complicated one.

  • HARI SREENIVASAN:

    Let’s talk a little bit about the bonuses. Roughly how much are they going to spend on the bonuses and how much they’re going to save on the tax cuts?

  • MICHAEL CORKERY:

    So what they’ve said is bonuses will cost cost the company about $300 million. The raises that they’re giving for the starting wage of about $400 million. So all told about $700 million. We’re not sure exactly and the company hasn’t said how much they’re going to save from the tax cut but an estimate that we got shows it is probably about $2.2 billion a year. So much of it’s going to be spent on employees but most of it’s going to be spent elsewhere.

  • HARI SREENIVASAN:

    What about the timing of these announcements? There are 120 – 130 different companies that have all announced this but this is also part of the narrative that the Trump administration is saying “Hey look tax cuts were good!”

  • MICHAEL CORKERY:

    Yeah it couldn’t have – this was a gift to the Trump administration. Republicans taking a lot of heat that these tax cuts mainly going to benefit the rich. And here’s Walmart that employs you know, million hourly workers, you know, the working class. Well, some would say they’re not even working class or even below that in terms of a working wage. And here they’re saying – the company saying – we’re going to use this tax cut, thank you very much, to invest and give more money to these, you know lower wage people. So yeah it was, I mean, it was Paul Ryan was tweeting about it as Exhibit A. “Look how great this tax cut is!” Steve Mnuchin, the treasury secretary was also touting it. So yeah it was a nice plum for for the Trump administration.

  • HARI SREENIVASAN:

    Is it a risk for companies that they are taking sides in a political conversation especially when the country is so divided and they’ve got customers that are on both sides of the aisle?

  • MICHAEL CORKERY:

    Yes and I think Walmart learned that when they announced this because I think if they hadn’t, if the company hadn’t tied it to the tax cut, I don’t think the criticism about the Sam’s Club closings would have been so tough on the company. I think, I mean, retailers are closing stores all the time! It’s difficult and painful for the workers but this they really took it on the chin. And I think it was because they opened themselves up to it by politicizing what otherwise is a, you know, what companies are doing all the time.

  • HARI SREENIVASAN:

    All right Michael Corkery of The New York Times. Thanks so much.

  • MICHAEL CORKERY:

    Thanks.

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