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Walmart raises its minimum wage to $11, hands out bonuses to hourly workers

It's also dishing out bonuses of up to $1,000 to its hourly workers.
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What's happening?

Walmart is raising its starting wage for hourly workers to $11 starting in February.

According to CNBC, Walmart's current starting wage is $9, though it jumps to $10 after the completion of training.

The retailer will also be expanding maternity and parental leave benefits, give parents who are adopting a child $5,000 to cover expenses, and providing a one-off cash bonus of up to $1,000 to eligible hourly workers.

This will come as a boost to the 21,500-plus workers Walmart currently employs in Minnesota at both Walmart and Sam's Club stores, of which about a third can expect raises.

How will the bonuses break down?

The bonus amount will depend on years of service. And to get the full amount you'll need to have worked there a looong time.

– $1,000 for 20 years of service

– $750 for 15-19 years of service

– $400 for 10-14 years of service

– $300 for 5-9 years of service

– $250 for 2-4 years of service

Walmart says the one-off bonuses will cost it $400 million, and will one million hourly workers, it works out at roughly $400 per worker.

Why is Walmart doing this?

Walmart says it is able to increase its wages because of the tax bill passed by Congress in December, which cuts corporate taxes from 35 to 21 percent.

The increase in wages will add an extra $300 million to its annual costs.

Related:

We asked MN's Fortune 500 companies what they'll do with corporate tax cut savings

Walmart says it expects to make additional investments in its business once the full effects of the tax changes are known – which could include lowering prices for customers.

It follows the lead of other major companies such as AT&T, Wells Fargo and U.S. Bank in announcing bonuses for workers following the passage of the tax bill.

However in AT&T's case, the bonuses handed out to 200,000 workers came at the same time it cut thousands of jobs across the country, the IndyStar reports.

But wait, hasn't Target already done this?

Yes, and they didn't wait for a tax cut to do it.

Target raised its hourly wage to $11 this past October, and announced it is aiming to have a $15-an-hour base wage by 2020.

That said, Walmart employs a significantly larger amount of people – 2.1 million worldwide and 1.4 million in the U.S. alone. Its increase in hourly wage is expected to benefit more than a million workers.

Target on the other hand employs around 323,000 workers, according to its website.

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