Wal-Mart Announces Hourly Wage Increase

New $11 an hour wage to help Wal-Mart better compete in a tightening labor market.

Wal-Mart Stores Inc. is increasing its starting hourly wage to $11 and giving one-time bonuses to employees.

According to a report by Bloomberg, the increase goes into effect in February and will cost $300 million on top of annual wage hikes that were already planned. The one-time bonus of up to $1,000 is based on seniority and will amount to an additional $400 million. In addition, Wal-Mart plans to expand it maternity and parental leave policy and adding an adoption benefit.

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The wage increase and bonus payment will help the company to even its pay gap with rival Target Corp., which raised its minimum hourly wage for all team members to $11 in October, and has plans to increase its minimum hourly wage to $15 by the end of 2020. Bloomberg also called the move a nod to the U.S. government for cutting the corporate tax rate.

Wal-Mart has also announced plans to close a number of Sam’s Club warehouse locations following a portfolio review. Business Insider reported 63 units were set to close.