Tags: tax reform2.0 | wage growth | tax cuts | jobs

Report: Tax Cuts Have Limited Impact on Wage Growth

Report: Tax Cuts Have Limited Impact on Wage Growth

By    |   Tuesday, 02 October 2018 01:05 PM

Companies are putting their Trump tax cuts to work, but not necessarily into raising worker wages, The Wall Street Journal reported Tuesday.

Most of the reinvestment of tax cuts savings has going into capital investments, employee training, acquisitions, or investor dividends, according to Korn Ferry International poll of 152 companies with combined annual revenues of $700 billion, per the report.

Only 14 percent of the companies have increased or plan to increase base pay at a faster rate.

"They're doing everything they can to avoid seeing their permanent payroll go up," Adecco Staffing Senior VP Bill Ravenscroft told the Journal.

Here are the complete results of the survey, which asked what the 152 companies have used their tax savings on, or plan to (total of percentages are greater than 100 percent because companies were permitted to choose more than one), the Journal reported:

  • Increase capital investments at a faster rate: 49 percent.
  • Increase cash reserves: 41 percent.
  • Increase investment in employee training: 34 percent.
  • Increase acquisitions: 32 percent.
  • Pay higher dividends to shareholders: 32 percent.
  • Increase hiring at faster rate: 26 percent.
  • Provide greater bonuses or incentive pay: 18 percent.
  • Increase rate of share buybacks: 17 percent.
  • Increase base salaries at faster rate: 14 percent.
  • Enhance employee benefits: 13 percent.
  • Increase 401(k) contributions: 13 percent.
  • Provide one-time bonuses: 9 percent.

Other surveys had even more negative results for worker wage increases. A Mercer LLC should just 4 percent of 1,500 companies polled are putting tax saving into bigger paychecks, while Aon PLC's survey of more than 1,000 companies found 99 percent of them saying tax cuts are not prompting them to increase minimum wages.

Amazon was not one of them, announcing Tuesday they were raising their U.S. minimum wage to $15 per hour.

The Republican majority in Congress and President Donald Trump's administration passed the Tax Cuts and Jobs Act a year ago, lowering the corporate tax rate from 35 percent to 21 percent.

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Companies are putting their Trump tax cuts to work, but not necessarily into raising worker wages, The Wall Street Journal reported Tuesday.
tax reform2.0, wage growth, tax cuts, jobs
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2018-05-02
Tuesday, 02 October 2018 01:05 PM
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