According to Mercer’s Impact of US Corporate Tax Reform on Employee Rewards poll which was conducted in January, 79% of employers are expecting to receive tax savings from the new tax law.
Approximately, one-third - 32% of the 241 companies who participated - expect to redirect some portion of corporate income tax savings into their employee reward programs. 47 percent have stated that they do not plan to redirect the savings to any employee programs and 22% state that they do not expect any tax savings.
HR professionals have seen many stories about giant organizations passing their savings to their employees but, until the study, it has not been possible to get a true picture of just how many employers - percentage wise - that will be.
Since the U.S. Tax Cuts and Jobs Act was passed there have been several high-profile reports from companies announcing plans to redirect tax savings into increased minimum wages or one-time bonuses for their employees, either of which would be welcomed by their employees.
The survey results reveal that employers are also considering a broader range of actions. Some survey participants said that they anticipate increasing investment in employee training and development programs - with redirected tax savings - than any other action. This is a sign that many companies are looking for longer-term investments in human capital.
Mary Ann Sardone - a partner and the North America Workforce Rewards Practice Leader with Mercer - says the findings suggest that companies are thinking of tactical ways to use the tax savings for long-term goals. She stated:
“Using redirected tax savings for employee training and development signals that many companies are looking for longer-term investment in their human capital. While tax reform is still new, many companies are considering a wide range of potential employee investments as they evaluate their approach. As with any strategic human capital investment, alignment with overall business and people strategy is critical to having a lasting impact.”
One major example is AT&T. The company announced it would give a $1,000 bonus to more than 200,000 U.S. workers and invest $1 billion in the U.S. economy because of the new tax law.
Adam Michel, policy analyst for economic studies at The Heritage Foundation, thinks the moves that businesses are making show proof that tax reform is working. He stated:
“Raises, bonuses and new investments spurred by tax reform show that the Republicans tax reform is working how they said it would. Businesses across America are putting their tax cuts to work for the American people. This first wave of stories is great news, but the real benefits are yet to come. Tax reform expands the economic pie so that more Americans will be better off.”
