© 2024 91.9 KVCR

KVCR is a service of the San Bernardino Community College District.

San Bernardino Community College District does not discriminate on the basis of age, color, creed, religion, disability, marital status, veteran status, national origin, race, sex, sexual orientation, gender identity or gender expression.

701 S Mt Vernon Avenue, San Bernardino CA 92410
Where you learn something new every day.
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

How Trump's Corporate Tax Cut Is Playing Out For Wal-Mart


This week, Walmart joined a chorus of companies who say the big corporate tax cut is motivating them to raise wages, pay bonuses and make more investments. But that good news story was undercut later in the same day when word trickled out that Walmart is closing 63 of its Sam's Club warehouse stores and laying off thousands of workers. We've asked NPR economics correspondent John Ydstie to join us to sort this out. So, John, thanks for joining us, first of all.

JOHN YDSTIE, BYLINE: Happy to be here, Michel.

MARTIN: Well, Walmart seems to be feeling generous with some of its employees and laying off others. And what role is the tax cut playing in this, if any?

YDSTIE: Well, there's no doubt that Walmart and many other companies are very happy that the top corporate tax rate was slashed from 35 to 21 percent. It'll save Walmart billions of dollars a year. And it certainly makes it easier for the company to raise its minimum wage to 11 bucks an hour. But there are other forces at work here that have little to do with the tax cut.

MARTIN: Well, what are those forces?

YDSTIE: Well, the U.S. unemployment rate is down to just over 4 percent, very close to full employment. So Walmart needs to raise wages just to attract and hang onto employees. And there's evidence that that helps. Walmart boosted wages and training back in 2015. And according to the analysts, that helped them increase same-store sales continuously since then.

MARTIN: Well, that invites the question of why Walmart is closing 10 percent of its Sam's Clubs, and as we understand it, that that means laying off some 11,000 workers.

YDSTIE: Yeah. Well, even though the overall economy is strong, for traditional retailers, there are challenges like online shopping. Walmart says those Sam's Club stores were underperforming. The company does say it is going to convert about a dozen of them to e-commerce fulfillment centers, so some of those workers may be rehired.

MARTIN: But as we said earlier, it's not just Walmart saying the tax cut is motivating them to boost wages and investment. AT&T and Wells Fargo, just to name a couple of companies that people may have heard in the news, are saying the same things or similar things. How should we assess what they're saying?

YDSTIE: Well, I think in the case of both of them, there are additional factors at play. For one thing, both have a reason to try to curry favor in Washington.

MARTIN: Because Wells Fargo is being penalized by the government for deceiving customers. And President Trump has threatened even more punishments.

YDSTIE: Exactly. So Wells Fargo has an interest in saying the tax cut is the reason it's boosting wages for its employees, precisely what the president predicted would happen, in order to gain favor with Trump and avoid more penalties. That said, Wells Fargo is also competing for workers in a strong economy, so they might have boosted wages whether there was a tax cut or not.

MARTIN: But what about AT&T?

YDSTIE: We don't know for sure. But remember, AT&T wants to buy Time Warner, but the Trump administration is blocking that deal in court. So AT&T could be thinking that saying the tax cut motivated the company to pay big bonuses to workers might just get the Trump administration to ease its opposition to the deal.

MARTIN: So the economy is pretty strong right now. Is that the result of these tax cuts?

YDSTIE: Well, business confidence in the U.S. has risen in the past year, partly anticipating the tax cut and also in response to regulatory restraint by the Trump administration. So that may have boosted the U.S. economy a bit, but the economy was already on a solid foundation. And a good deal of the recent pickup is due to the very positive global economic picture, which has little, if anything, to do with U.S. taxes.

MARTIN: That's NPR economic correspondent John Ydstie. John, thank you.

YDSTIE: You're welcome, Michel.

(SOUNDBITE OF , "") Transcript provided by NPR, Copyright NPR.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.