Trump's tax cuts aren't why companies are giving out raises for Christmas

[Yo_Mama_Been_Loggin]

It’s Christmastime for workers, and companies want everybody to know.

After Congressional Republicans passed their $1.5 trillion package of tax cuts on Wednesday, a number of companies responded by announcing raises or bonuses for their workers. Comcast said it would give $1,000 bonuses to more than 100,000 workers. Fifth Third Bancorp said it would give out bonuses and boost its minimum wage, with the cut giving the bank, in its words, “the opportunity to reevaluate its compensation structure and share some of those benefits with its talented and dedicated workforce.” AT&T, Boeing, Washington Federal, and Wells Fargo did much the same.

The announcements seemed the result of some basic financial logic: Lower corporate taxes — the Republicans’ bill cut the corporate rate to 21 percent from 35 percent and included provisions to encourage businesses to bring cash back from overseas — would mean higher corporate profits and thus more money to pay workers with.

Indeed, the White House itself has estimated that tax reform would add $4,000 to the average worker’s annual paycheck, as a conservative estimate. And President Trump lauded the companies’ announcements, tweeting: “Our big and very popular Tax Cut and Reform Bill has taken on an unexpected new source of ‘love’ — that is big companies and corporations showering their workers with bonuses. This is a phenomenon that nobody even thought of, and now it is the rage. Merry Christmas!”

But many economists, including the government’s own nonpartisan scorekeepers, dispute the notion that workers will get much of the gains from corporate tax reform, which President Trump signed into law on Friday. They argue that shareholders, not workers, stand to benefit the most. Recent history suggests the same, with the wealthy the primary beneficiaries of soaring corporate earnings and a booming market.

Contrary to companies’ stated reasoning, many of those wage increases and bonuses would have happened anyway, it seems, given how low the unemployment rate is right now. Though wage growth has been in a long-term slump, paychecks are finally rising as the jobless rate has fallen below 5 percent and stayed there, with earnings growing the fastest for the lowest-wage workers. Plus, 18 states are raising their minimum wages in 2018, requiring businesses to pay out an estimated $5 billion more to 4.5 million workers.

Given those dynamics, businesses are likely using the tax cuts in part as a way to advertise pay increases that were already planned and to curry favor with the Trump administration and Republicans on the Hill. To wit: Wells Fargo waffled on whether its pay increases had anything to do with tax reform, first saying they did not and then correcting the record and saying they did. “Minimum pay is a topic that we continue to review as part of our efforts to attract and retain talent, and we have been on a path to increasing the minimum hourly rate,” a spokesman toldThe Los Angeles Times.

https://www.msn.com/en-us/money/companies/trumps-tax-cuts-arent-why-companies-are-giving-out-raises-for-christmas/ar-BBHa6We?li=BBnbfcN&ocid=edgsp

[SharonClark]

1. I worked for Wells Fargo and we always got an annual 'bonus' but it was called profit sharing.

I also worked for Principal Financial and Nationwide Insurance - same thing except it was substantially more than $1000. The only organization I worked for that did not provide it was county government.

[Blue_Tires]

2. +1

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