One of the highest compliments paid to me by a former student was from a young woman in the first statistics class I ever taught (non-AP)….she said that she “would never read the newspaper the same way again.”  It is through this lens that I would like to present some of the data behind the Walmart headlines last week. Walmart announced that it increase the minimum wage it pays to $11 per hour, and give some bonuses too, as a way of sharing some of the benefits it will receive from the corporate tax rate cut from 35% to 21% with its employees.  

I have pulled as much information as I could glean from the articles on Walmart last week and list the facts below.  You can draw your own conclusions about the motivation for Walmart’s moves. Better yet, present the data to your students and let them debate the issue!

• Minimum wage will be increased to $11/hour, with plans to move the rate to $15 by 2020.
• Maternity benefits increased for hourly workers to 10 weeks full pay, and paternity/adoption/foster parent leave is now available for hourly workers, giving them the same benefits as salaried workers.
• The cost of the minimum wage increase and expanded leave is estimated to be $300 million per year.
• In 2015, a comprehensive rate and benefit plan, including moving the minimum wage to $10, cost the company a projected $2.7 billion over 2 years.
• Non-management employees will be paid bonuses between $200 and $1000.  (This is the first time in 56 years a bonus was paid.)
• The bonuses are projected to cost $400 million (one-time).
• Approximately 1,000,000 employees could benefit from these changes.
• Walmart also announced that they would be closing 63 Sam’s Clubs, 10-12 of these will be converted to distribution centers, and 10,000 employees will potentially be negatively impacted by the closings. 
• Analysts estimated that the drop in the corporate tax rate as a result of the Tax Cuts and Jobs Act will save Walmart up to $2 billion per year.

Let’s add some context to these numbers.  The Washington Post included this calculation about what working full-time at Walmart looks like:

“Eleven dollars an hour equals about $19,000 a year for 34-hour weeks, which Walmart considers full time. That is below the national poverty line for a family of three.”

And Politico added this fact about the sheer scope/reach of the Walmart employee base:

First, Walmart raised starting pay to $11 an hour for front-line employees. Today, 600,000 hourly Walmart employees—60 percent—work in states where the minimum wage is less than $8 an hour. That’s Walmart setting base pay almost 40 percent above the minimum in places like Texas, Pennsylvania, Virginia, North Carolina and Missouri.

Relevant Non-Walmart news

• Unemployment in the United States currently sits at a 17-year low.
• Target announced in September of 2017 that it would increase its minimum wage to $11/hour, moving up to $15/hour by 2020.
• AT&T, American Airlines, and others declared a $1000 bonus as a result of the tax reform decrease in the corporate tax rate.
• In the financial sector, Wells Fargo and 5/3 Bank have announced a $15 minimum wage.

Questions:

• From a financial standpoint, approximately what will the net impact be to Walmart’s bottom line from these three changes (new wage/benefits, bonuses, tax decrease)?
• How much of the tax savings will Walmart be investing in their employees in the first year? Future years? 
• What impact do you think this will have on how employees feel about working at Walmart?
• How do you think this will impact local businesses that have a Walmart nearby? 
• List the reasons behind these decisions made by Walmart management. What do you think was primary reason they made these changes to employee pay and benefits?

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