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

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NEW YORK -- 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.

State Desk on 01/12/2018

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