CVS is the latest retailer to raise employee pay and offer more benefits in the wake of a big boost from the new tax bill President Donald Trump signed into law in December.
Starting in April, CVS will increase starting pay for hourly employees from $9 per hour to $11 per hour, CNBC reported. Also, full-time staffers will be eligible for up to four weeks of paid parental leave. Further, the price they pay for health care premiums will remain at the current level.
CVS also plans to adjust pay for many retail pharmacy technicians and other hourly employees, the report stated. The retailer employs more than 240,000 employees. According to CNBC, the company’s investments in its employees will total about $425 million annually.
The retailer also expects to spend some $275 million on “investments in the business, including data analytics, care management solutions and pilot programs,” CNBC reported.
In addition to the tax cut, CVS received good news from its fourth-quarter financial report. The company’s net income increased to $3.29 billion, or $3.22 per share, up from $1.71 billion, or $1.59 per share, when compared to last quarter, CNBC reported.
What have other retailers done?
Other big-name retailers such as Walmart, Starbucks, and Home Depot are also boosting wages in an effort to find and retain good employees in a tightening labor market, CNBC reported. The trend began shortly after Trump signed the Tax Cuts and Jobs Act.
Walmart, for example, recently increased its starting pay for associates to $11. The retailer also expanded its parental and maternity leave policies and is offering a one-time bonus to some employees.
Under the tax law, the corporate tax rate was reduced from 35 percent to 21 percent, according to Fox Business. That has resulted in a windfall for some businesses.
CVS, for example, expects it to “add $1.2 billion to its cash flow,” CNBC reported.
What have critics said?
Critics of the tax law point out that corporations, not employees, are the real winners. Democrats this week said the tax reform will allow corporate shareholders to pocket almost $100 billion.
“The president will try to tell the American people that his great political victory is a win for working people, but they see all the benefits going to his type of businesses: real estate pass-throughs,” Sen. Jack Reed (D-R.I.) told Reuters.