Skip to content Skip to footer

Walmart’s Response to Tax Reform Highlights US Wealth Inequality

Tax reform likely had very little to do with Walmart raising wages.

The GOP is still reveling in victory at finally overhauling the U.S. tax code, while conservative allies work the press to claim that the cuts are already saving the middle class money and stimulating the economy.

One of their biggest success stories? Walmart. Ironically, though, it is Walmart that highlights the biggest problem with the new tax code — and why the wealth gap is only going to get worse.

Walmart was one of a series of businesses — many of them banks and airlines — to announce bonuses and raises in celebration of the new tax bill. Most chose bonuses, since, as the Washington Post reports, they don’t represent any sort of long-term commitment to better pay.

Walmart, on the other hand, chose to increase wages. Shortly after the bill passed, the company announced a new policy that would raise their starting hourly wage to $11 an hour, and even add perks like paid parental leave.

The announcement was hailed by many Republicans as proof that their bill would truly help lower and middle class Americans, rather than simply serve as a handout to the nation’s wealthiest. But the truth is that tax reform likely had very little to do with it.

“Observers said Walmart almost had to raise wages now if it wanted to keep step with peers such as Target, which late last year raised its starting wage to $11 an hour, with plans to reach $15 by 2020,” reports the Post. “‘I would’ve been astounded if they hadn’t raised wages,’ said Thomas Kochan, a professor at MIT’s Sloan School of Management. ‘What’s impossible to sort out is how much of this is because of savings from the tax cuts, and how much is because of pressure they’re receiving from employees and labor groups.'”

Odds are that public pressure, rather than tax breaks prompted the policy change. At the same time that Walmart announced its new pay structure and perks, the company also announced that it would be closing over five dozen Sam’s Clubs — another Walton family-affiliated business, resulting in job losses for thousands of workers.

As Reuters reports:

The world’s largest retailer and private employer, officially called Wal-Mart Stores Inc, will shutter 63 of its Sam’s Club discount warehouses, or about one tenth of the chain overall, according to a senior company official who declined to be named. Around 50 of those stores will be shut permanently after a review of profitability and up to 12 more will be shut and reopened as e-commerce warehouses, the person said. Every Sam’s Club store employs about 150 workers, bringing the total number of affected jobs to about 7,500, the person said. Many of them will be accommodated in new jobs at the newly opened warehouses and other stores, the official said.

Conservatives often claimed that raising the wages of hourly workers would lead to an immediate need for layoffs, and the Walmart/Sam’s Club wage hike and closures couldn’t be a more cartoonish example of a business following through on its longstanding threat — and still expecting praise for “passing on” its newfound windfalls to its smallest employees.

It’s also an utterly shameless example of corporate greed.

Earlier in January, Time Magazine released its “10 Richest Women in America” figures. All of them, unsurprisingly, either inherited or married into their wealth. And nearly one-third of them are a part of the Walton family.

Time reports:

The richest women in America have more in common than just their wealth. From Jacqueline Mars to Christy Walton, the 10 richest women in America are all descendants or widows of the founders of some of the biggest companies in the country — from Walmart to Apple to Mars candy. In fact, three of the richest women are from the Walton Family (of Wal-Mart), and another three are from the Cox family (of Cox Enterprises fortune). It’s for that reason that women like Oprah Winfrey, who has a net worth of $2.8 billion, and Marian Ilitch, who co-founded Little Caesars Pizza, are not on this list. (They are, though, among the richest self-made women in America.)

The Walton women make up three of the ten richest women in America, and Walton son Rob Walton skids into the bottom of the top 10 richest American men. Together, these four scions alone represent over $100 billion, and they’ll be able to hold on to and pass down even larger portions of that wealth now that the new tax reforms will go into effect.

And the wealth gap? Well, that’s only going to grow even larger.

We have hours left to raise $12,000 — we’re counting on your support!

For those who care about justice, liberation and even the very survival of our species, we must remember our power to take action.

We won’t pretend it’s the only thing you can or should do, but one small step is to pitch in to support Truthout — as one of the last remaining truly independent, nonprofit, reader-funded news platforms, your gift will help keep the facts flowing freely.