BENTONVILLE, Ark. – Tax reform is driving Walmart to raise its starting hourly wage to $11 and give bonuses of up to $1,000 to employees, Bloomberg reports. The new wage will go into effect in February. Walmart will pay $300 million in addition to yearly raises already planned previously. The company will shell out another $400 million in the form of one-time bonuses to reward workers who won’t benefit from the higher starting wage. Walmart also plans to expand maternity and paternal leave policies, and include an adoption benefit to its benefits package.

“We’ve seen wage stagnation for many years, so it’s super important for lower-wage workers to see their wages rise,” said Elise Gould, a senior economist at the Economic Policy Institute. “It’s due to two factors—state-level increases and a tightening labor market.”

Since Walmart initially raised its starting hourly wage to $10 two years ago, states have enacted their own minimum wage thresholds. Washington, D.C., California, Massachusetts and Washington have a minimum wage of $11 per hour, while Arizona, Colorado, Maine, New York and Oregon will achieve that level in 2018. Eighteen states have a higher minimum wage this year.

Walmart follows AT&T Inc., Boeing Co. and Wells Fargo & Co. in announcing the use of tax reform to benefit employees. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” said Walmart CEO Doug McMillon.

“We think this is a prudent use of tax reform proceeds, as it reinforces the company’s commitment to improving in-store service levels and will pressure other retailers to invest more heavily into wages and prices,” said Stephens analyst Ben Bienvenu.