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Walmart Wages, NSA Spying, Dropbox IPO: CEO Daily for January 12, 2018

Alan Murray

Good morning.

Walmart announced yesterday it will raise starting wages for hourly workers to $11 beginning next month, and will give some of its workers one-time bonuses of as much as $1,000. More than a million employees could benefit. CEO Doug McMillon said the move was a response to the tax cut.

That won’t placate labor unions advocating a $15 minimum, and it comes at a time when labor markets are tightening anyway. Moreover, the announcement was accompanied by news that Sam’s Club is closing 63 stores and that Walmart is expanding cashier-free checkout. Nevertheless, the move is further evidence that the company—which used to be as ruthless about holding down wages as it is about negotiating supplier prices—is rethinking the way it treats associates. Walmart previously raised the starting wage in 2015 and 2016 to $9 and $10, respectively.

I talked with CEO Doug McMillon about this change when I interviewed him at the Economic Club of New York in November. You can watch that interview here. But I came away convinced that McMillon, in partnership with Walmart chairman Greg Penner, has adopted a significantly different approach to worker pay than his predecessors.

Ultimately, of course, the real test of tax cuts will be whether they convince companies to invest and create jobs in the U.S. I was chastised yesterday by one reader—initials H.B.—for praising a column by Robert Pozen, former chairman of MFS Investment, and Bob Steel, former Treasury undersecretary, that called on public company CEOs to invest their tax windfalls in plants, people, research and technology, rather than in dividends and share buybacks.

H. B.’s response: “Management teams often destroy value by ‘investing’ low cost capital in low or negative return investments. If a company can invest the capital at a high rate of return, great. If they can’t, they should either ‘invest’ in market share through lower pricing, ‘invest’ in upgrading their labor productivity with higher wages, or return the capital to investors through buybacks/dividends.”

H.B.’s argument would make sense in a world where capital markets operate efficiently. But if you believe, as I do, that today’s markets put an excess premium on the short-term returns that buybacks and dividends can generate, then some leaning against the wind is welcome.

More news below.

Alan Murray @alansmurray alan.murray@fortune.com

Top News

Warrantless NSA surveillance takes another step forward.

The U.S. House of Representatives voted 256 to 164 to extend the program for another six years with minimal changes. Congress enacted the law in 2008. The bill to extend it must still pass the Senate, but few senators appear to want major changes to the spying law. New York Times

Facebook makes major changes to its News Feed.

Professional publishers out, personal connections in—mostly, anyway. The adjustment to the content filter on the social network’s News Feed component is part of a larger effort to return to prioritizing users’ interactions with each other, rather than with news and other unpaid content created by companies. Reuters

Fiat Chrysler moves some production from Mexico to Michigan.

The automaker will invest $1 billion to move Ram heavy duty trucks, which are a profitable business, from Saltillo, Mexico to Warren, Mich. The move gives FCA a hedge against disruption from a possible U.S. pullout of NAFTA. Wall Street Journal

Donald Trump really steps in it.

The U.S. president reportedly asked legislators why the country should allow immigrants from “shithole” countries in Africa as he rejected a bipartisan immigration deal to strengthen border protections and extend protections against deportation for hundreds of thousands of young immigrants. Trump’s extraordinary and crass remarks sparked broad criticism. Associated Press

Around the Water Cooler

President Oprah? She’s ‘a strong force,’ Bill Gross says

“I like what she said and how she said it,” the Janus Henderson fund manager said of Winfrey’s speech at this year’s Golden Globes. He responded to an on-air question about his support for a hypothetical Oprah Winfrey presidential campaign. Bloomberg

Should South Korea ban cryptocurrencies?

The country reportedly wants to crack down on digital currencies by banning the trading of them on exchanges. In tandem the price of Bitcoin fell almost 14%, more sharply on Korean exchanges. Wall Street Journal

Would you drive a car without a steering wheel or pedals?

General Motors thinks so. The automaker has petitioned the federal government for permission to deploy self-driving Chevrolet Bolts that lack a steering wheel, pedals, and other manual controls ahead of the planned launch of a robo ride-sharing service in 2019. Fortune

Dropbox is the next big tech IPO.

The file-sharing software company, valued at $10 billion, has confidentially filed to go public this year. It would be the biggest tech IPO since social darling Snap, which has lost much of its luster since going public. Reuters

This edition of CEO Daily was edited by Andrew Nusca. Find previous editions here, and sign up for other Fortune newsletters here.