The big corporate tax break that became law last month is great news for companies and their investors. But what about employees? How much of the corporate tax windfall will go to workers via higher wages?þþSince President Trump signed the $1.5 trillion tax cut into law on Dec. 22, nearly 20 large companies have announced some form of bonus or wage hike for their employees. Will they make a difference? Or are they merely publicity stunts?þþ“This is not a P.R. stunt,” said Teresa Tanner, who oversees marketing and human resources at Fifth Third Bank, a regional lender in the Midwest that is raising its minimum wage and giving some employees a $1,000 bonus. “The tax cut will be an ongoing benefit for us and we wanted to share this with our employees. It is the right thing to do.”þþMany of the large companies that have announced fatter future paychecks are also subject to close regulatory scrutiny. Among them: AT&T, which was one of the first companies to publicly announce plans to reward employees with a one-time bonus. The company is also wrestling with Mr. Trump’s Justice Department, which has blocked its planned merger with Time Warner.þþFor most large companies, experts believe that the proceeds of the big tax cut will largely go toward paying for companies to repurchase their own shares, a tactic that tends to boost stock prices. The new law will drop the corporate income tax rate to 21 percent from 35 percent and usher in other big side benefits.þþEconomists and analysts expect much less of the tax winnings to go to permanent pay increases for employees, who, as a whole, have endured stagnant wages over the past decade. That’s especially true for larger companies.þþ“The majority of these funds will go to shareholders,” said Jeffrey A. Sonnenfeld, a dean of leadership studies at the Yale School of Management.þþFor smaller companies, which have been experiencing a boom in the past year, wages have been marching higher, due partly to higher demand for increasingly scarce workers. These smaller companies have been quietly hiring workers, even if they’re not trumpeting one-time tax-related bonuses.þþ“Our companies have been raising compensation for a year now,” said Bill Dunkelberg, chief economist for the National Federation of Independent Business, a trade group for small businesses.
Source: NY Times
