The Trump administration was ecstatic with Walmart on Thursday, and for good reason.
The retail juggernaut announced it would raise its minimum starting wage to $11 per hour, hand out between $200 and $1,000 in bonuses to current employees and expand its parental leave benefits. Walmart CEO Doug McMillon in a press release made it crystal clear why he had made the decision: “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.”
The administration held Walmart’s announcement up as proof that the money the newly signed tax law hands over to corporations was already trickling down into the pockets of American workers. White House press secretary Sarah Huckabee Sanders celebrated the company decision, while President Donald Trump’s daughter Ivanka tweeted, “Thanks to the passage of historic tax cuts, American workers and their families are winning!’”
Trump himself shared a video on Twitter of Fox Business discussing the news and declared, “Great news, as a result of our TAX CUTS & JOBS ACT!”
The media largely credited Republicans as well.
“Trump’s Tax Bill Prompts Walmart To Raise Starting Wage, Give $1,000 Bonuses To Some Employees,” Newsweek declared in its headline. CNBC started off their story by stating, ”Walmart’s workers will soon reap the benefits of the recent tax law changes.”
Ever since Congress overhauled the U.S. tax code last month, a number of companies have announced bonuses and raises, pointing to the dropping corporate tax rate as the main reason why. “The verdict is starting to come in,” Senate Majority Whip John Cornyn (R-Texas) said earlier this month. “Many folks are pleasantly surprised, that this is the first time Congress and Washington D.C. has done something to make their life better.”
But citing a brand new tax law as the predominant reason for Walmart’s decision downplays the basic economic forces the company has been grappling with for years.
In 2015, back when Barack Obama was still president and tax law was little more than a Paul Ryan fantasy, Walmart similarly announced that it had decided to raise its baseline wage to $9 per hour almost immediately, and to $10 per hour the year after that. At the time, McMillon, Walmart’s CEO, had no qualms about suggesting the broader economy was a main reason for the change. “It’s great to see the job market getting better, and the market works, so we’re adjusting to that market,” he told CNBC.
In 2016, CNN cited the increasingly competitive labor market and a low unemployment rate ― which makes finding and retaining workers more difficult ― as the primary reasons Walmart was increasing wages and benefits.
Those trends have not only continued through 2018, but intensified. Advocates and tax policy experts alike said on Thursday that it was shocking that the country’s largest employer hadn’t raised wages earlier.
Investor’s Business Daily reported as much last October. Shortly before that, Target, one of Walmart’s largest competitors, made the decision to increase its minimum wage to $11 per hour and to $15 per hour by 2020, causing Wall Street analysts and Walmart investors to worry Walmart would try to keep up. Around the same time, the article said, Autozone’s CEO had said that wage pressure resulting from close to 4 percent unemployment was growing “significantly more than I have experienced in my nearly 23 years of AutoZone.”
In addition, 18 states were poised to raise their minimum wages on New Year’s Day. As a result, several states including California, Massachusetts and Washington now boast minimum wages at or above Walmart’s $11 mark for large companies. And by this time next year, at least four more states will join them ― with an additional half-dozen or so scooting above (and in some cases significantly above) Walmart’s previously set $10-per-hour floor as well, according to National Conference of State Legislatures’ website.
Add all of that together, and tax policy experts and worker advocates couldn’t help but note that Walmart’s Thursday announcement tying the decision to the tax law rang more than a little disingenuous ― a savvy and well-timed public relations move more than anything else.
Walmart didn’t respond to a request for comment for this article.
“I have to think that some part of that is political,” said Ann C. Hodges, a professor at the University of Richmond who specializes in labor and employment law. ”You want the tax cut to have political support ― this one and future ones.” Telling people they are going to get more money in their pockets as a result is exactly how you gin it up, she said.
Perhaps, like McMillon implied, the tax law helped “accelerate” the implementation of otherwise inevitable wage increases. But Gregg Polsky, a tax professor at the University of Georgia, argued that even in a scenario in which the tax law did allow businesses to make major new investments, not nearly enough time has passed yet to translate that into higher wages.
“I think of this very much as correlation with the tax bill and not causation,” said Anastasia Christman, a research director at the National Employment Law Project.
The labor market may have been pushing Walmart to raise wages to get and retain quality employees, Christman said. But, she continued, “If you can instead make yourself look like you are bringing this theory of trickle-down economics to fruition, why not put out a press release?”