Boss, about that raise and all those new co-workers ...
At the center of the new tax bill is a deep and permanent reduction in the corporate tax rate that will provide business titans with billions in extra cash to expand operations, create new jobs and pay higher wages _ at least, those are the zealous expectations of President Donald Trump and the tax overhaul's supporters.
But for many companies, the first order of business will be taking care of their own, and I don't mean the rank and file. That translates into plans to repurchase company stock, increase shareholder dividends and, of course, probably raise top executive compensation.
What's fueling my skepticism? By mid-December, before the final votes were cast, at least two dozen companies launched significant stock buybacks, corporate dividend increases or a combination of both.
Boeing, for example, is raising its dividend by 20 percent and kicking off a $18 billion stock repurchase program. United Airlines has unveiled a $3 billion buyback. Fortune Brands, Waste Management and Morningstar also raised their dividends and initiated stock buyback plans.
Trump's tax promises undercut by CEO plans to reward investors �
Many more companies are sure to follow.
Tactics like dividend hikes and aggressive stock repurchases are ways for shrewd CEOs at public companies to manage their balance sheets and keep investors happy _ especially return-hungry institutional shareholders who can get on a CEO's nerves.
But the moves also signal that companies aren't in a great hurry to bankroll expansion, pay their workers higher wages or make America great.
Let's remember the corporations enjoying this hefty tax gift _ the corporate tax rate will be slashed to 21 percent from about 35 percent _ are under no formal obligation to use this money in the U.S. or to improve the lot of American workers, many of whom make up the middle class this new tax blueprint is supposed to aid.
A legislative proposal that sought to link the corporate tax cut to guarantees of domestic expansion and higher payrolls was quickly shot down during congressional negotiations.
For the moment, companies can sit on their cash stash and let the economy keep chugging along at its expected 3 to 4 percent growth rate.
Employers are scrambling to fill jobs _ the unemployment rate is 4.1 percent nationally, and in Illinois it's 4.9 percent. Throughout most major sectors _ manufacturing, agriculture, technology, service industry, health care and more _ there's a mad dash to find qualified workers.
Yet here's the irony. While jobs are plentiful, workers aren't seeing fatter paychecks. In fact, what they're paid isn't keeping pace with the cost of living.
In November, for example, real average hourly earnings declined 0.2 percent from the month before, according to the U.S. Bureau of Labor Statistics. The monthly dip continues a longtime trend.
Gee, if only companies had the cash to pay their workers more.
Well, now is the time. Companies should start shrinking the yawning gap between those at the very top of the organization and everyone else.
There also needs to be a commitment to training, and retraining workers so they can grow in their jobs and not be pushed aside when technology or the economy changes. And companies should be thinking overtime about embarking on new ventures, domestic expansion of facilities and services while reinvesting in the communities where their businesses are located.
The corporate cash windfall is meant to be reinvested in the country. That may not be the letter of this gargantuan tax bill but it is the spirit of the document.
Corporate America, you can afford it.
