Bonuses, Benefits and Layoffs: Here's How Gop Tax Reform Is Affecting the Retail Sector

A sign on the exterior of a Lowe's home improvement warehouse store is seen May 22, 2006, in San Bruno, California. Photo by Justin Sullivan/Getty Images

Following a dismal 2017 that saw 67,000 fewer jobs in the retail sector, nearly 7,000 store closures and a slew of bankruptcies, many American retailers are experiencing a rebound.

Lowe's, Home Depot, Starbucks and Disney were among several companies that announced benefits or bonuses for employees, which some credited to President Donald Trump's Tax Cuts and Jobs Act. However, some of these retailers have coupled the good news with layoffs.

David French, senior vice president of government relations at the National Retail Federation, told Newsweek that he expects more retailers to make positive announcements. "Middle-class families are our best customers. We expect that many of the benefits from the tax bill going into their pockets will be spent in retail." French said the tax bill is set to increase consumer spending by $100 billion in 2018.

Home improvement giant Lowe's was the latest business to announce bonuses. Lowe's will offer a one-time $1,000 bonus to 260,000 hourly employees. The announcement can be tied to the recent changes in the U.S. tax code.

Trump touted the Tax Cuts and Jobs Act in his State of the Union address on Tuesday. The president said decreasing the corporate tax rate from 35 percent to 21 percent was a win for big businesses and workers alike. He added that tech company Apple would hire 20,000 workers and make $35 billion in U.S. investments.

"Since we passed tax cuts, roughly 3 million workers have already gotten tax cut bonuses—many of them thousands and thousands of dollars per worker," Trump said during the annual address. "This is our new American moment. There has never been a better time to start living the American dream."

In January, the U.S. economy added 200,000 jobs, and wages grew at the fastest pace in over eight years. Republicans have called the new tax law a win for the working class.

Still, some retailers who initially announced bonuses, including Walmart and AT&T, subsequently announced layoffs. Further, a Monday poll from Reuters/Ipsos found that just 2 percent of American adults said they had received a raise or a bonus from the new tax law.

AT&T was the first to announce one-time bonuses as a result of the tax bill. Just days later, it reported plans to lay off more than 1,000 employees in early 2018. Walmart announced it would raise the minimum wage for its workers to $11 per hour on January 11 but, that same day, announced the closure of 63 Sam's Club stores. Walmart also laid off between 400 and 500 corporate employees at its headquarters last week. More store closures and layoffs are anticipated for mall retailers this year.

Sears Holdings Co., the parent company of Sears and Kmart, announced Wednesday that it would lay off 220 employees at its corporate headquarters. Earlier this year, the company announced it would close 103 Kmart and Sears locations by April 2018. Sears Holdings has yet to announce benefits from the changes to the tax code.

Such announcements follow a rocky year, where major retailers including Macy's, J.C. Penney and Sears/Kmart shuttered brick-and-mortar stores across the country as e-commerce giant Amazon grew.

"Last year, most news cited a 'retail apocalypse,' but that's not really what's happening," French told Newsweek, adding that the retail industry is experiencing a shift toward online sales. "In the U.S., there's probably too much retail square footage."

American retail trade saw an increase of 203,000 jobs in 2016, according to the U.S. Bureau of Labor Statistics, then a drop of 20,300 jobs in December 2017.

The loss of retail jobs could be a result of increasing online shopping or "just noise," Capital Economics chief U.S. economist Paul Ashworth told Yahoo Finance in January about December 2017 jobs numbers.