Tuesday, January 23, 2018

Post Tax Plan Raise Okey-Doke?



I just saw a press release from JP Morgan Chase announcing pay raises and bonuses for their rank and file employees that attributed the move to the Trump Tax Plan.

Seeing lots of companies advertise bonuses/pay increases in response to the Trump Tax plan made me think:

1. Publicizing it in this way feels like it is being done to gain Trump's favor.

Everyone knows that Donald Trump operates on the "You say something nice about me, i'll say something nice about/do something nice for you" principle. Companies are about their bottom (and top) lines - from a money perspective, it only makes sense to say nice things about the man who is cutting your taxes and cutting regulations that used to make it more expensive for your company to operate.

2. How much of this is rebranding planned behavior?


What were these companies planning to do before the tax cut was signed into law? I know WalMart was planning to give raises in response to Target raising wages for their employees. Once the tax plan passed, they made it seems as though their wage increase came as a result of Trump's beneficence, not competitive pressure.

3. How much are these raises *actually* costing these companies?


How does the cost of these raises compare with the overall benefit to the companies from the tax cut? Are the raises funded by 1% or 51%? How are companies generally investing this money?

Addendum - I just stumbled across an article from the NYT that says these bonuses and raises represent a very small percentage of the windfall the companies will receive from the tax bill (we're talking 5% for bank of america, Less than 1% for Apple)

In closing


I want to believe that this is all being done for the right reasons, but press release after press release from these companies (especially wal mart announcing raises one day and huge layoffs and store closures the next) leads me to believe that this is a big distraction/marketing ploy.

I mean...everyone is saying that "wall street wins, main street loses" etc etc - but it is difficult to reliably know when subjectivity ends and objectivity begins