While Walmart is using tax reform to raise its nationwide minimum wage to $11 an hour and to grant bonuses, the Red Robin restaurant chain is reacting to mandated minimum wage laws by laying off all of its busboys.
Walmart CEO Doug McMillon in a press release explained why he had made the decision: “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.”
At the same time, however, Walmart announced it would shutter 63 Sam’s Clubs stores, effectively laying off 7,500 workers. Some of the stores will be converted to e-commerce warehouses.
Red Robin said it expects to save $8 million annually by eliminating the busboy position at its 570 locations. Previously, the firm had eliminated the position of expediter, a person who assembles food on the plates.
“Labor costs across the country are going up, and that’s clearly putting pressure on all restaurants,” said Jason Rusk, Red Robin’s vice president of innovation.
On Jan. 1, 18 states and 19 local governments raised their minimum wage requirements. Seattle already has a $15-an-hour minimum wage, while other states and localities are inching toward that level in the years to come.
Walmart competitor Target raised its minimum wage to $11 in September, and said it would raise its minimum wage to $15 by 2020. Walmart and Target’s new minimum wage levels exceed the state minimum wage in all but three states, according to a research note from financial services firm BTIG. In those states, the companies must pay more on an hourly basis.
Walmart raised its minimum wage to $9 an hour in 2015, and the next year said it would offer $10 an hour to those who complete an in-house training program. Wages at the world’s largest retailer now range from $11 to $24.70 an hour, with the average being $14.50.
The federal minimum wage has been stuck at $7.25 an hour since 2009.