Those Tax-Cut Bonuses May Be Fleeting
Taxes

Those Tax-Cut Bonuses May Be Fleeting

iStockphoto/The Fiscal Times

Plenty of questions remain about how workers will ultimately fare from the Trump tax overhaul. The White House has cited a rash of bonus payments from major corporations as proof that workers are benefiting from the tax cuts, with more gains ahead as companies invest to expand and eventually raise wages. But critics point out that most of the corporate tax cut windfall thus far is being spent on share buybacks and dividend payments, which mostly benefit shareholders and senior managers, leaving workers with little more than what Nancy Pelosi infamously called “crumbs.”

The nonprofit group JUST Capital, whose analysis suggests that about 58 percent of the tax cuts are flowing to shareholders, provided another data point for the debate this week. According to its analysis of the Russell 1000 companies, 53 percent of the tax-cut driven investments in workers that have been announced so far are one-time bonuses, while just 29 percent are permanent wage increases. This suggests that the majority of workers will see a temporary boost in pay, but no long-term increase in wages.

The emphasis on bonuses over salary increases shouldn’t come as too much of a surprise. The human resources consulting firm Aon Hewitt has found that companies have been dedicating a greater share of payroll to bonuses over the last 30 years, and the wage share has declined. (The chart from The New York Times below displays the data.) Tax cut or not, American business is still focused on controlling costs, and the that includes limiting wage increases whenever possible.

TOP READS FROM THE FISCAL TIMES