- Joined
- Sep 23, 2015
- Messages
- 8,688
- Reaction score
- 2,708
Back in 2015, Walmart’s stock plunged 10% in a single day when the company said wage hikes were hurting profitability. And that helps explain why scores of companies are suddenly boosting pay now that the Trump tax cuts are going into effect.
Many CEOs credit the Trump tax cuts with boosting the competitiveness of U.S. businesses and generating more confidence about the future.
But CEOs aren’t normally altruistic, and it’s unlikely they’re throwing money around just to be generous. Instead, they’re responding to a tightening labor market by sweetening the deal for workers, at a time when Wall Street isn’t likely to care about rising labor costs–because the tax cuts will boost profits anyway.
The unemployment rate, at 4.1%, is at the lowest level in 18 years. There are roughly 6 million unfilled jobs in the U.S. economy, with more firms saying they can’t find the workers they need. Many economists think that should have pushed pay up by now—but it hasn’t, really.
“Wages have by and large not risen,” says Peter Kenny, senior market strategist for Global Markets Advisory Group. “Employers are being forced to address that as the employment picture continues to tighten. These steps are meant to improve morale, increase retention and boost productivity.”
Companies may also be giving workers a lift now, because they see moves coming later this year, such as stock buybacks, that will primarily benefit shareholders. So bonuses and raises could be an effort by companies to inoculate themselves from criticism that their response to the tax cuts primarily benefits the wealthy.
https://www.yahoo.com/finance/news/real-reason-trump-bonuses-192322608.html
Many CEOs credit the Trump tax cuts with boosting the competitiveness of U.S. businesses and generating more confidence about the future.
But CEOs aren’t normally altruistic, and it’s unlikely they’re throwing money around just to be generous. Instead, they’re responding to a tightening labor market by sweetening the deal for workers, at a time when Wall Street isn’t likely to care about rising labor costs–because the tax cuts will boost profits anyway.
The unemployment rate, at 4.1%, is at the lowest level in 18 years. There are roughly 6 million unfilled jobs in the U.S. economy, with more firms saying they can’t find the workers they need. Many economists think that should have pushed pay up by now—but it hasn’t, really.
“Wages have by and large not risen,” says Peter Kenny, senior market strategist for Global Markets Advisory Group. “Employers are being forced to address that as the employment picture continues to tighten. These steps are meant to improve morale, increase retention and boost productivity.”
Companies may also be giving workers a lift now, because they see moves coming later this year, such as stock buybacks, that will primarily benefit shareholders. So bonuses and raises could be an effort by companies to inoculate themselves from criticism that their response to the tax cuts primarily benefits the wealthy.
https://www.yahoo.com/finance/news/real-reason-trump-bonuses-192322608.html
