Thursday morning, Walmart had a flashy announcement: Thanks to corporate tax cuts, it was giving its employees bonuses of up to $1,000. Walmart and President Trump pointed to the announcement as proof that the corporate tax cuts are really a boon to working-class Americans.
Walmart employees are eligible for the $1,000 bonus only if they’ve worked at the company for 20 years. Most Walmart employees, of course, haven’t worked there that long. Those employees will receive a smaller bonus based on seniority. Walmart didn’t explain exactly how the sliding scale will work but said the total value of the bonuses will be $400 million. Walmart has about 2.1 million employees, which works out to be an average bonus of about $190.
The one-time bonus Walmart announced this morning amounts to just over 2 percent of the total value of the tax cut to the company.
In the fiscal year 2017, Walmart had pre-tax profits of about $20.5 billion and paid an effective federal tax rate of around 30 percent. With a new corporate tax rate of 21 percent, the corporate tax cut is worth at least $1.85 billion to Walmart every year. Since this cut is permanent, the true benefits to Walmart will grow much larger over time. But it’s safe to say that, over 10 years, this corporate tax cut will be worth over $18 billion to Walmart.
But now it appears the announcement was timed carefully to cover for thousands of unannounced layoffs.
Business Insider reports that today, Walmart is abruptly closing numerous Sam’s Clubs stores across the United States. In some cases “employees were not informed of the closures prior to showing up to work on Thursday” and “learned that their store would be closing when they found the store’s doors locked and a notice announcing the closure.”
Sam’s Club shutdown? Employees at this S Loop store tell me they showed up to work and were told store is closed effective today. Sign on door says the same thing. Hearing other stores also affected. Waiting for answers from parent company, Walmart #khou11pic.twitter.com/RtbY7EhiIK
Walmart confirmed the abrupt closings and offered an explanation of sorts on Twitter. “Closing clubs is never easy,” the company said through its verified corporate account.
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. Closing clubs is never easy and we’re committed to working with impacted members and associates through this transition.
Business Insider identified at least 68 stores across the country that closed today. Three of the stores are located in Hurricane ravaged Puerto Rico. More stores are slated to be closed in the coming days.
Walmart’s behavior is part of a pattern of corporate misdirection related to the GOP tax cuts. AT&T and Comcast both announced bonuses for their employees while also laying off thousands.
While Trump talks about a “jobs boom,” job growth was slower in 2017 than in any year since 2010.
MULTIPLE OTHER COMPANIES HAVE DONE THIS AS WELL INCLUDING COMCAST AND AT&T.
And this brings us to the main point. The claim that if wages go up, jobs go down isn’t a description of reality at all. Nor, in my opinion, does it reflect legitimate economics. It is a negotiating strategy. It is a scam, a con job, a threat — more precisely, it is an intimidation tactic masquerading as a legitimate economic theory. I believe this is where being a businessperson and not an economist leads to greater clarity. Very few economists have ever run a business or negotiated wages. But the first rule in the businessman’s handbook on wage negotiation and suppression is always, always when they ask for a raise, threaten their jobs. It works like a charm and has since the invention of capitalism. You see, the claim if wages go up, employment goes down isn’t made because it is true. It’s made because if people like me can get people like you to believe it is true, I’m going to get richer, and you are going to get poorer. The lower your wages are the higher my profits will be. It’s that simple.
The lower your wages are the higher my profits will be.
And that, too, is also a fallacy. There’s a point at which employers are shooting themselves in the foot if they keep dicking their employees around. Walmart is a classic example. Hire only part timers so you don’t have to give benefits. Lowest wages in the industry. Cut the costs associated with its employees as much as you can in service of this idea that lower wages leads to higher profits. This is what drives me nuts about amateur, arm-chair economists. They keep thinking in simple 1 to 1 relationships about complex human behavior. But the way it works out is that if you don’t invest anything in your employees? Guess what? They don’t invest anything in you either.
Hearseeno 