Walmart said Thursday that it is boosting its starting salary for U.S. workers and handing out bonuses. The announcement came as the company also confirmed it is closing dozens of Sam’s Club warehouse stores — a move that a union-backed group estimated could cost thousands of jobs.
The world’s largest private employer said it was closing 63 of its 660 Sam’s Clubs over the next weeks, with some shut already. Up to 12 are being converted into e-commerce distribution centers, the company said.
It did not disclose how many people would lose their jobs, but said some workers may be placed at other Walmart locations. Making Change at Walmart, a campaign backed by the United Food and Commercial Workers International Union, estimates that 150 to 160 people work at each Sam’s Club store, meaning the closures could affect about 10,000 people.
Lauren Fitz, 22, said she was at her other job as a church secretary when a colleague texted to say that the Sam’s Club where they both worked in Loveland, Ohio, had closed. Fitz had been pleased earlier to read the news that Walmart was boosting starting salaries and offering bonuses.
“I thought, ‘This is really cool.’ And then to find out that my store is closing,” said Fitz, who said she had worked as a sales associate in the jewelry department for two months. At home, she got a call from her manager and had a letter in the mail saying the store had closed and she could seek employment at another Sam’s Club or Walmart store.
Local news reports said Sam’s Clubs stores were closing in Texas, California, New Jersey, Ohio, Indiana and Alaska, among other states.
“Transforming our business means managing our real estate portfolio and Walmart needs a strong fleet of Sam’s Clubs that are fit for the future,” Sam’s Club CEO John Furner said in a statement. “We know this is difficult news for our associates and we are working to place as many of them as possible at nearby locations.”
Earlier in the day, Walmart cited the sweeping Republican tax overhaul that will save it money in announcing the higher hourly wages, one-time bonuses and expanded parental benefits that will affect more than a million hourly workers in the U.S.
President Donald Trump cheered the announcement with a tweet, saying, “Great news, as a result of our TAX CUTS & JOBS ACT!” White House spokeswoman Sarah Huckabee Sanders later said she would not comment on the Sam’s Club closings but that the wage increases were a sign that the tax measures “are having the impact that we had hoped.”
Walmart representatives did not respond to a question about the timing of the dual developments.
Rising wages reflect a generally tight labor market. The conversion of stores to e-commerce sites also illustrates how companies are trying to leverage their store locations to better compete against Amazon as shopping moves online.
Large employers also have been under pressure to boost benefits for workers because unemployment rates are at historic lows, allowing job seekers to be pickier.
But the low unemployment has meant that retailers have had trouble attracting and keeping talented workers, experts said. Walmart employees previously started at $9 an hour, with a rise to $10 after completing a training program. Target had raised its minimum hourly wage to $11 in October, and said it would raise wages to $15 by the end of 2020.
While many department store chains such as Macy’s and Sears are struggling, retailers as a whole are still trying to hire. The retail industry is seeking to fill 711,000 open jobs, the highest on records dating back to 2001, according to government data. The longer those jobs go unfilled, the greater pressure on employers to offer higher wages.
Walmart, which reported annual revenue of nearly $486 billion in the most recent fiscal year, said the wage increases will cost it an additional $300 million in the next fiscal year. The bonuses will cost it about $400 million in this fiscal year, which ends on Jan. 31.
It joins dozens of companies including American Airlines and Bank of America that have announced worker bonuses following the passage of the Republican tax plan that slashed the corporate tax rate from 35 percent to 21 percent.
The company said the wage increase benefits all hourly U.S. workers at its stores, including Sam’s Club, as well as hourly employees at its websites, distribution centers and its Bentonville, Arkansas, headquarters. The one-time bonus between $200 and $1,000 will be given to Walmart employees who won’t receive a pay raise.
In all, Walmart employs 2.3 million people around the world, 1.5 million of which are in the U.S.