Economic News

Multiple Businesses Announce Bonuses, Wage Increases Citing Tax Bill

In the weeks since the Republican-backed tax bill was passed, cutting the federal corporate tax rate from 35% to 21%, several major companies have announced bonuses, raises, and other benefits for their employees. Among them The Walt Disney Company says it will give $1,000 to all of their non-executive part and full-time employees — of which they have more than 125,000 — while also unveiling an upgraded education initiative for their hourly workers. Similarly Home Depot plans to distribute bonuses to all of their hourly employees, ranging from $200 to $1,000. However, some critics say these bonuses are merely P.R. moves and that, if these companies really wanted to help their employees, they’d raise wages.

To that criticism, controversial retailer Walmart plans to both raise their minimum wage and also gift workers with bonuses. Starting next month the chain will raise its minimum to $11 an hour — which is well above the federal minimum wage of $7.25, although certain states and cities have much higher minimums. Additionally Walmart will expand their parental leave benefits and will gift associates with bonuses of up to $1,000 based on their length of service. Also announcing across-the-board benefit increases, Starbucks will be raising wages, giving baristas stock grants of $500 to $2,000, and introducing a new sick leave program.

With these corporations all citing the tax bill as the reason for their generosity, naturally President Trump, Speaker of the House Paul Ryan, and others have been frequently tweeting about these announcements as proof that the bill’s benefits are coming to fruition. Of course not everyone agrees that Republicans and the bill in particular can claim all the credit. As an article by Benn Steil and Benjamin Della Rocca points out, this marks the third Walmart wage hike in three years. This would suggest that perhaps the latest round of raises has less to do with politics and more to do with attracting and retaining workers. Meanwhile the New York Times argues that this string of bonuses we’re seeing is not proof of long-term “trickle down” effects that lawmakers often boast, especially given their “one and done” nature.

Ultimately the Times is likely right in stating that these bonuses should not be viewed as long-term indicators. That said there’s no denying that these bonuses will certainly help out a number of workers, even if it is likely only a temporary fix (although one could argue they could lead to bigger benefits if used “correctly”). Looking forward, of the announcements so far, it would seem that the added educational, parental leave, and sick leave benefits may actually be the more impactful changes overall. In any case there’s no doubt that we will see the debate over whether this latest tax bill is functioning as intended for quite some time.

Also published on Medium.

Other Articles by Jonathan Dyer