- Wells Fargo quickly announced a company-wide minimum wage of $15 an hour.
- So did Fifth Third Bancorp, which plans to give the majority of its employees a $1,000 bonus.
- Boeing debuted a $100 million employee training package.
- Comcast also announced $1,000 bonuses to “eligible frontline and non-executive employees,” as well as a $50 billion investment over the next five years in infrastructure and its businesses.
- Western Alliance plans to raise the pay of the bank’s lowest-earning employees by 7.5 percent as well as increase matching contributions to 401(k) accounts.
All of this sounds fantastic and would seem to give some credence to Republican claims that the corporate tax cut in their tax plan will indeed trickle down to workers. President Trump tweeted this morning that “companies are already making big payments to workers.” Multiple House Republicans also tweeted about the news.
But let’s not get too excited by this sudden burst of corporate generosity. If you are thinking it’s too good to be true, you are likely right.
For one thing, this is actually very unsettling. Not only does it feel as though companies are attempting to curry favor with Trump as if he were a Third World potentate, at least one of these companies — I’m looking at you, AT&T — is embroiled in a contentious legal dispute with the U.S. government.
What’s more, these steps, while welcome, are hardly going to counter the vast benefits the wealthy will receive from this bill, much of which will come at the expense of the those less well-off. They also don’t address whether workers more broadly will actually receive a sizable jump in wages, or a sizable share of the benefits of the massive economic growth — if indeed that even happens — that Republicans claim these tax cuts will engender.
Take the AT&T case.
As it happens, the Communication Workers of America, which represents more than 200,000 workers at the company, reports that it wrote to AT&T and a number of other companies last month, asking them to commit to a $4,000 wage increase — the amount, as it happens, Republicans claim the average American will gain as a result of tax reform.
Beth Allen, a spokeswoman for the CWA, told me that last week, AT&T chief executive Randall Stephenson informed the union they would give those employees the one-time $1,000 bonus, should the tax reform proposal become law.
But as Allen told me, “It’s not a wage increase. It’s just a bonus.” Allen added: “A wage increase is different than a bonus. It’s long-term and permanent.” Bonuses, after all, can be one-time events that might not be repeated. Wage increases are seen in paychecks week after week, month after month, year and year. Until the workers get a real raise, the tax plan isn’t doing enough for them.
Allen also told me that the CWA is still not a fan of the tax plan, arguing that even if it resulted in a short-term bonus, it will be on balance worse for workers, over the long-term, anyway. “We generally do not believe the tax bill will be good for working people,” Allen said, citing worry that it will create deficits that will allow congressional Republicans to try to cut social welfare programs such as Medicare and Medicaid.
Beyond all this, while a bonus is a nice gesture — and a raise is, of course, a good thing — there was certainly nothing from stopping any company from taking such actions sooner. Overall, corporate balance sheets are flush, and stock prices are at record highs — and have been for some time. As Ben White noted at Politico, “These announcements are nice and good on all the companies for doling out some extra cash. But they are relatively small chunks of the vast piles of cash sitting around corporate balance sheets.”
In other words, despite what the companies are saying, there just isn’t any clear evidence in these announcements that the tax plan will, in any broader sense, have the impact that Republicans claim it will.
Meanwhile, it’s all but certain wealthy shareholders will make out really well. Reuters is keeping a running list of companies that have announced stock buybacks and dividend increases since Congress voted on the tax bill. So far, the count is at two dozen.
AT&T may have another motive here, too. Trump is not exactly shy about calling out corporations who have displeased him while lavishing praise on those he favors. For AT&T, it worked. Trump promptly gave the telecommunications giant a shout-out. “That’s because of what we did,” he said at a White House news conference held to celebrate the tax bill’s passage. “That’s pretty good. That’s pretty good.”
No doubt AT&T is pretty happy about that. AT&T — again, the first company out of the gate — is in a rather nasty battle with the Trump administration, over its proposed merger with Time Warner. The Justice Department is attempting to stop the combination, claiming that if the merger occurs, it will allow the company to charge rival distributors higher fees than they otherwise would to distribute their content.
It’s well known that Trump has what could be kindly described as a personal beef with what he believes is CNN’s negative coverage of him. CNN is owned by Time Warner, and executives involved in the deal have speculated that the Justice Department’s action is not, shall we say, entirely disinterested.
“Is AT&T trying to get on Mr. Trump’s good side?” the New York Times’s DealBook wondered about the coincidence.
Indeed, it’s hard to avoid the feeling that many of these companies are timing and phrasing these announcements to curry favor with the mercurial Trump administration. And while I am happy to see workers get raises, playing to the ego of the head of state is how business gets done in banana republics. It’s not what we should expect to see in a functioning democracy.