NEW YORK — Jan 11, 2018, 7:23 PM ET

Walmart boosts starting pay, closing dozens of Sam's Clubs

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Walmart confirmed Thursday that it is closing 10 percent of its Sam's Club warehouse stores — a move that a union-backed group estimated could cost thousands of jobs — on the same day the company announced that it was boosting its starting salary for U.S. workers and handing out bonuses.

The world's largest private employer said it was closing 63 of its 660 Sam's Clubs over the next few weeks, with some shut already. Up to 12 are being converted into distribution centers to handle online orders, the company said late Thursday.

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.

"It was very sudden and very shocking," Fitz said. "I don't think our managers had any inkling yesterday. It was a normal shift."

On Twitter, Sam's Club responded to people's queries by saying, "After a thorough review of our existing portfolio, we've decided to close a series of clubs and better align our locations with our strategy."

Local news reports said Sam's Clubs stores were closing in Texas, California, New Jersey, Ohio, Indiana and Alaska, among other states.

Earlier in the day, Walmart had 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.

"This is nothing but another public relations stunt from Walmart to distract from the reality that they are laying off thousands of workers," said Randy Parraz, a director of Making Change at Walmart.

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.

Walmart announced years ago that it would actively manage its store portfolio as it strives to put a dent in Amazon's dominance online. With Thursday's closing, that strategy is now extending to Sam's Club.

Online retailers typically pay warehouse employees who pack and ship orders more than store jobs pay. Job postings at an Amazon warehouse in Ohio, for example, offer a starting pay of $14.50 an hour.

"This is about the evolution of retail," said Michael Mandel, chief economic strategist at the Progressive Policy Institute. "The rise of e-commerce is leading to higher wages."

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.

"They raised the minimum wage because they have to," Mark Zandi, chief economist at Moody's Analytics, said about Walmart. "The labor market is tight and getting tighter."

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. "Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.," Walmart CEO Doug McMillon said Thursday.

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. A one-time bonus will be given to those Walmart employees who won't receive a pay raise. The amount, between $200 and $1,000, depends on how long they worked at the company. Walmart said those being laid off at Sam's Club will still receive a bonus.

In all, Walmart employs 2.3 million people around the world, 1.5 million of which are in the U.S.

Walmart also announced that full-time hourly U.S. employees can get 10 weeks of paid maternity leave and six weeks of paid parental leave. Before, full-time hourly workers received 50 percent of their pay for leave. Salaried employees, who already had 10 weeks paid maternity leave, will receive more paid parental leave.

For the first time, Walmart also promised to help with adoptions, offering full-time hourly and salaried workers $5,000 per child that can be used for expenses such as adoption agency fees, translation fees and legal or court costs.

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AP Business writers Michelle Chapman in Newark, New Jersey; Chris Rugaber in Washington, D.C.; and Joyce M. Rosenberg in New York contributed to this report.

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  • charlie jones

    Walmart's decision, made long before the implementation, not only impacted approximately 10,000 workers without prior notice, it stabbed its customers as well, particularly those who used the SAM's club pharmacy. Without notice to both worker and customer, Walmart simply closed 10% of its Sam Stores and then scurried to minimally explain its actions without providing details to either displaced employees or loyal customers. This, friends, is the true heart of this company's management. It made no qualms about destroying down-town mid-American towns, or keeping its employees just below the level that brought about medical coverage. The sad part is that regardless of what we say, they will do it again and again and again.

  • Disqus1451

    One day’s notice is horrific. I’ve been with a company that made many departmental changes and such and employees never had such sort notice. Time to trasfer or find another job was provided. It may not have been enough, by some standards, but not days! I feel terrible for them.

  • NearFallPoints

    Gee Thanks Obama for the store closings.

  • mikevietvet68/69

    who will trump blame when his wall street friends pull all the money out of the stock market? can't blame dems.cause they have no control in wash.but i say after 2018 elections and they win all the elections in the u.s. then the nod will be given to destroy the economy and blame the dems for it as they always do,only thing to do is if you have money get it in your own possession not in the market or the banks as they are not trustworthy institutions...

  • ianemdee

    Shop at Sam's Club.....IF you don't mind standing interminably in too few checkout lines attended by disgruntled employees.

  • mikevietvet68/69

    its there stores but when trumpler and moe green look-a-like mnuchin spout off what a beautiful tax-plan they gave the people then have walmart and all these other corporations lay-off people then they really do believe they can tell us grand stories and and we are to believe them,trump's entire cabinet is a group of elitists and multi-millionaires and they are out to enrich their own families and not further the middle or lower class fortunes.

  • notagain

    This is the "trickle down" you've all been waiting for. See how well it works? smh

  • Tom Adams

    So Walmart cares so much about their employees that it will close these SAM stores overnight? They could have said the stores will close in a week or month so that the employees could at least have a little time to get prepared, but instead they let the employees show up for work to find the stores are closed.

  • Eva

    Where are the Trump supporters now? Yesterday they all bent over for Trump and his tax cuts being the only reason Wal-Mart increased wages, but now 10,000 jobs are at risk so they can save money.

    It's Carrier all over again.

  • Jack25

    10000 jobs list. Are we winning yet?

  • Sejal

    Sams club just proved that the tax cut benefits they received from Trump only resulted in putting more money in the corporation's pockets and in the screwing over of lower income people.

  • NavinJay

    I thought Trump's trumped up tax plan was to keep this from happening? Oh well.

  • Paul Luman

    What about those who have been there a little over a year, making $10 and hour? Those that come in new make $11 an hour and then make $12 an hour after training? Where's my $2 an hour pay raise? Even if I received a $200 a bonus, it only covers the first month.

  • murray

    some gains, lots of pains with lost jobs.

  • Arryandan

    It's interesting to see what big business is doing with their tax-breaks. It LOOKS like they are taking the cash and running away from "job creations".

  • Gerald Newton

    Sam's Club was great, but we always bought too much for a couple.

  • Tyler U

    Here’s the real reason Walmart increased their wages: online retailers, like amazon, have them dead to rights when it comes to people’s preference to shop online, and be able to get the product they want, when they want it. Amazon benefits by not having to stock products in physical retail locations, so they save a ton of money. Amazon also pays their employees around $15 an hour, which, at this point in time, is about on par with the cost of living (I believe actual par is $16)

    Physical retailers, such as Target, and stores in my area, like Crest, WinCo, etc, offer better pricing, more local selections (as opposed to product imported fro countries like Bengladesh, where Walmart has most of its good produced at well-below minimum wage prices, and where there are virtually no labor laws, and poor working conditions dominate), and they also pay their employees more. Walmart cannot compete anymore, and thanks to capitalism, they don’t have much of a choice, but to get with the program, lower prices, and pay their employees more. Unfortunately, Walmart is still very finicky when it comes to doing that.

    They won’t be able to compete once other local retailers push toward $15/hour wages, and they will never be able to touch Amazon when it comes to online retail. I’d love to see Walmart fail here in the US, so some other, more worthy entity can step up and do things better.

    People only shop at Walmart because it’s convenient. I shop there because it is literally right down the street, and there are two of them within a 2 mile radius of me. It has nothing to do with their product, how they treat their customers/employees, or that they offer “everyday low prices.” It is literally convenience, and once something else becomes more convenient, they’re out.

    I literally only go to Walmart for groceries, and I don’t even go inside; I use their online grocery. Convenience. When WinCo foods (who offers more product, at lower prices), or amazon starts doing the same thing in my area, Walmart is out, especially if they start delivering my groceries to my door.

  • Tyler U

    “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. A one-time bonus will be given to those Walmart employees who won't receive a pay raise. The amount, between $200 and $1,000, depends on how long they worked at the company. Walmart said those being laid off at Sam's Club will still receive a bonus.”

    This doesn’t make sense. They say this pay raise will benefit all workers, but then immediately state that it won’t, but that those who don’t get a pay increase will get a one time bonus... double talk, huh?

    Further, they talk about the benefits all of these full-time workers get, but every single person I’ve ever known and talked to, who has worked at Walmart, has never been full time, since Walmart doesn’t want to pay the benefits. Are there even full time employees at Walmart? It seems the only full time employees are managers, who already make this kind of pay.

    So, Walmart gets a massive pat on the back for paying their part time employees, what, $100-$200 a week before taxes? (Most people I’ve talked to get 10-20 hours a week, if that). That’s IF they are included in the pay raise.

    And in exchange, they lay off 10,000 other employees?

    Walmart is doing a terrible job trying to make themselves look good...

  • GarfieldRocks

    What a nasty way to do it. Just put locks on the doors and let the workers find out they don't have jobs when they report for work. Pretty CS.

  • Randy rjjd

    Job losses continuing to mount as republican trickle down policies take hold.

  • GarfieldRocks

    Everyone that's sitting around telling themselves that it was because of that wonderful tax cut that people are getting raises and bonuses. Now you know that those raises and bonuses are nothing more than blood money where other people lose their jobs.

  • Leslie Davis

    Walmart is a private company and if they choose to close stores it's their business.
    Trying to make them out as evil is evil. When did you do anything that created anything for anyone else? Ask yourself that if you're complaining about Walmart.
    I was at a Walmart last week and saw a profile of people working there that we should be pleased are not in jail.

  • Fred

    a company raking in 468 billion, shouldnt have employees on assistance, if they cant pay the workers, the workers need to go elsewhere, we , the tax payers need to stop the corp gravy train.

  • 0bsoleteMan

    Why is the idea of a private business closing down an unprofitable store such a foreign concept to so many?

    Has anyone been paying attention to the retail sector in the past 20 years? If anything we will continue to see more closures.

  • kritikosman

    Balancing the pay scale.