The fact that paychecks have been slow to increase amid the robust economic recovery and record-high corporate profits has left some workers frustrated.
Recently, a possible theory has emerged: instead of raising wages, companies are giving out bonuses and adding benefits.
Don't get your hopes up, experts say.
"I'm not aware of any evidence that shows that bonuses as a general matter are increasing or that they're a substitute for wages," said Seth Harris, a deputy labor secretary under former President Barack Obama.
"Wage growth is too slow," said Lawrence Mishel, an economist at the left-leaning Economic Policy Institute. "It's not that they're hiding it in benefits."
Average hourly wages rose just 0.5 percent between September 2017 and September 2018, after accounting for inflation, according to the Labor Department.
President Donald Trump's massive tax overhaul, which slashed the corporate tax rate to 21 percent from 35 percent, prompted numerous companies to announce that they would be improving their benefits and dolling out bonuses.
The insurance company Aflac said it would increase its 401(k) match and CVS said it will absorb the rising costs of health insurance premiums.
At the same time, bonuses were given out by Walmart, AT&T, Darden Restaurants and dozens of other businesses.
However, Mishel said, "Highly publicized doesn't mean representative or actually taking place across the workforce."
Indeed, retirement and insurance benefits as a share of workers' compensation has remained flat between 2014 and 2018, according to Bureau of Labor Statistics data and Mishel's analysis.
In March 2018, paid leave, which includes vacation time, made up 7 percent or workers' total compensation, little different from a decade earlier when it comprised 6.8 percent.
Large companies actually cut back on bonuses in 2018 and plan to do so even more next year, according to new data from Aon, an insurance broker. (It surveyed 1,000 businesses with 5,000 or more employees.)
"It's particularly startling in light of the fact that the economy is strong and company performance is very good," said Ken Abosch, broad-based compensation leader at Aon.
Mishel at the Economic Policy Institute used Department of Labor data to analyze the role bonuses have played in compensation for all private sector workers since 2008.
It's a small one, he found.
The one-time rewards made up 2.8 percent of compensation in 2018, compared with 1.7 percent in 2008.
Ninety percent of workers should have higher take-home pay as a result of the tax cuts, said John Kartch, vice president of communications at Americans for Tax Reform, a conservative advocacy group.
He pointed to a list of companies providing new benefits and bonuses in response to the tax cuts.
"I've spent a lot of time on the phone with small businesses on this list, and I can tell you there is a lot of excitement out there," Kartch said. "I'd encourage you to reach out to some of them, beyond economists sitting behind desks in D.C. and New York."
Robert, a manager at a location owned by Darden Restaurants, who asked not to use his full name because he was discussing his job, described the bonus the company gave as a result of the tax cuts as "breadcrumbs at best."
After taxes, he was left with an extra $300. "I paid an electric bill and went out to eat," he said.
Darden did not respond to a request for comment.
The reality is that wages, benefits and bonuses are all slow to grow, Mishel said. "Workers are still waiting to see a payoff from the recovery," he said.
More from Personal Finance
How much the Mega Millions winner will get to save and spend
Are your finances better, worse or the same under President Trump?
Happy 100th birthday! Now, here's why you may pay surprise taxes
No comments:
Post a Comment