Taxes

Corporate Surveys Find Little Interest in Raising Wages

Written by SK Ashby

We knew the GOP's tax cuts were never going to lead to substantially higher wages, but you don't have to take it from us; you can just ask corporations.

Recent surveys of Corporate America found that very few companies are planning to raise wages in the next year and experts say it's because they don't want to add permanent costs.

From the Wall Street Journal:

A new survey of 152 companies by executive-recruitment firm Korn Ferry International revealed 14% were putting part of their tax-cut savings into base salary increases. A poll of 1,500 companies by consulting firm Mercer LLC showed 4% are redirecting tax savings to budgets for bigger paychecks in the coming year. And in a survey of more than 1,000 companies published by human-resources consulting firm Aon PLC, 99% said the tax cuts weren’t prompting them to increase minimum wages. [...]

“They’re doing everything they can to avoid seeing their permanent payroll go up,” said Bill Ravenscroft, senior vice president at Adecco Staffing, which recruits workers for companies.

I feel like I'm defending corporations by pointing this out, but they never promised to raise wages.

When Republicans made their final push to cut taxes for corporations and the rich, the idea that it would raise wages for average American was an exclusively-Republican promise. As you may recall, many firms and companies said they would use their windfall to buy back their own stocks and invest in automation before the tax cuts were even passed. We knew what they were going to do.

Congressional Republicans claimed average Americans would see their wages increase by $4,000 per year and Speaker Paul Ryan's office stepped on a rake once by pointing out a woman whose wages increased by $1.50 per week.

Likewise, the GOP's tax cuts have not led to any major investments that companies wouldn't have made even if the tax cuts were never passed.

Trump's former top economic adviser Gary Cohn actually spoke at the Wall Street Journal where he asked a room full of executives if they planned to make new investments and almost no one raised their hands.

Rolling back the GOP's tax cuts is going to be necessary at some point as the federal deficit approaches $2 trillion in the coming years (which will prohibit Democrats from passing progressive spending policies) but it's not going to be easy. Making it clear that the tax cuts have not a material impact on jobs or wages is going to be key to building support for rolling them back.

If they're not rolled back, new taxes will have to take their place. It's just math.