The President said companies are giving big bonuses to their workers because of the “Tax Cut Bill,” and the national media is offering a number of examples to back up this claim, but will the new law actually benefit most employees?
It all depends who you ask.
Yes, a number of major corporations have pledged to pass along some of the savings they’ll reap from the new 21% corporate tax rate (down from 35%) in the form of raises, bonuses and new investments in human capital.
One major example is AT&T. The company announced it would give a $1,000 bonus to more than 200,000 U.S. workers and invest $1 billion in the U.S. economy because of the new tax law.
Here are a few additional examples, courtesy of The Daily Signal:
- Aflac: $250 million boost in U.S. investments and increased 401(k) benefits, including a one-time contribution of $500 to every employee’s retirement savings account.
- American Savings Bank: $1,000 bonus to 1,150 employees, nearly the entire workforce, and increase minimum wages from $12.21 an hour to $15.15.
- Aquesta Financial Holdings: $1,000 bonus to all employees, and increase minimum wages to $15 per hour.
- Associated Bank: $500 bonus to nearly all employees and increased minimum wage to $15 per hour, up from $10.
- Bank of America: $1,000 bonus for about 145,000 U.S. employees.
- Bank of Hawaii: $1,000 bonus for 2,074 employees, or 95% of its workforce, and increase minimum wages from $12 to $15.
- BB&T Corp.: $1,200 bonus for almost three-fourths of associates, or 27,000 employees, and increase minimum wages from $12 to $15.
- Boeing: $300 million boost in investments to employee gift-match programs, workforce development, and workplace improvements.
Industry insiders, such as Adam Michel, policy analyst for economic studies at The Heritage Foundation, see the moves corporations are making as proof tax reform is working. According to Michel:
“Raises, bonuses, and new investments spurred by tax reform show that the Republicans’ tax reform is working how they said it would. Business across America are putting their tax cuts to work for the American people. This first wave of stories is great news, but the real benefits are yet to come. Tax reform expands the economic pie so that more Americans will be better off.”
‘Good marketing but …’
Others, however, feel it’s too soon to point to such a small sampling of bonuses and wage increases as proof the tax law will delivered as promised.
William Klepper, a management professor at Columbia Business School, said:
“It’s good marketing, but you don’t have a trend yet. It’s premature at this point.”
In fact, according to the White House’s own calculations, just 18 companies in the S&P 500 will dole out bonuses or boosted wages and/or benefits because of the tax law.