Wal-Mart Stores Inc. is boosting its startinghourly wage to $11 and delivering bonuses to employees,capitalizing on the U.S. tax overhaul to stay competitive in atightening labor market.

The increase takes effect next month and will cost $300 millionon top of annual wage hikes that were already planned, the world’slargest retailer said Thursday. The one-time bonus of up to $1,000is based on seniority and will amount to an additional $400million. The company is also expanding its maternity and parental leave policy and adding an adoptionbenefit.

Wal-Mart, the nation’s largest private employer, has fought inrecent years to improve its image in the U.S., as it weatheredcriticism over its treatment of employees. With the wageincrease and bonus payment, the company seeks to even its pay gapwith resurgent rival Target Corp., while simultaneously sending ahigh-profile thank you to the U.S. government for slashing thecorporate tax rate.

“Tax reform gives us the opportunity to be more competitiveglobally and to accelerate plans for the U.S.,” Chief ExecutiveOfficer Doug McMillon said in the statement.

The move comes three years after Wal-Mart last announced it wasraising wages, spending $1 billion in 2015 to lift starting hourlypay to $9 and then to $10 the following year -- for workers whocomplete a 90-day training course. The increase cut into profit andwas criticized by some longer-tenured employees as unfair to them.Since then, many states have enacted minimum wage laws, meaningthat a “sizable group” of its 4,700 U.S. stores already pay $11 anhour, according to spokesman Kory Lundberg.

“We think this is a prudent use of tax reform proceeds as itreinforces the company’s commitment to improving in-store servicelevels and will pressure other retailers to invest more heavilyinto wages and prices,” Ben Bienvenu, an analyst at Stephens, saidin a note.

Investors didn’t have a strong reaction to the pay hike. Theshares were littled changed on Thursday, trading at $99.65.The stock advanced 43 percent in 2017.

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Lower unemployment

The nation’s unemployment rate has also plummeted to 4.1percent from 5.7 percent since Wal-Mart’s first announcement ofhigher wages in 2015, creating a battle to recruit and retaincashiers and shelf stockers.

Even with the wage bump, many workers will struggle if they’rethe sole breadwinner. A rate of $11 an hour translates to $22,000 ayear for a typical 40-hour week, without paid vacation time. Thefederal poverty level for a family of four is about $24,600,according to the U.S. Census Bureau.

The wage hike follows Target’s October decision to increase itsminimum hourly wage to $11, which it will further boost to $15 bythe end of 2020. Costco Wholesale Corp. and other retail chainslike TJX Cos. have also raised wages in recent years.

The moves by Wal-Mart and others could help move the needle onstubbornly stagnant wage growth during the current economicexpansion -- if an increasing number of companies follow with theirown pay hikes. Average hourly earnings for production andnon-supervisory workers were up 2.3 percent in December from a yearearlier, according to Labor Department figures. In the previouseconomic uptick, wage growth peaked in December 2006 at 4.2 percenton a year-over-year basis.

Publicity wave

Wal-Mart’s decision makes it the latest corporate titan to plowexpected tax savings into employee payouts. Boeing Co., AT&TInc. and Wells Fargo & Co. have all made similar announcementsin recent weeks. Wal-Mart said it’s “early in the process ofassessing potential additional investments” it could make.

Wal-Mart also is coming off a resurgence in same-store sales inrecent years, giving it more of a cushion to boost pay. Lastquarter, the Bentonville, Arkansas-based company posted its strongest U.S. sales gain in morethan eight years.

Bonus bucks

The one-time bonuses will range from $200 to $1,000, dependingon how long workers have been with Wal-Mart. The idea is to rewardemployees who won’t benefit from the new starting wage.

The company also will provide full-time hourly workers with 10weeks of paid maternity leave and six weeks of paternal leave.Parents who adopt kids will get the same benefit, along with $5,000to help cover the costs.

— With assistance by Vince Golle

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