As it happens, we just now got in a request from a major client (“major” as in one of the largest employers in the US) to give them the cost of holding the employee contributions for health benefits flat for next year instead of the previously planned increase. Because per our client (in the form of the VP of HR) they are having discussions of how to invest the tax reform savings, and this is part of that discussion.
I love the smell of anecdata in the morning…
Anecdotes are useful when they’re from a very major corporation and are in opposition to people asserting that this type of thing “makes zero economic sense”.
Who says it makes zero economic sense to improve your benefits package to attract and retain your workforce?
I was quoting post #77, but the same thing is the essence of numerous posts to this thread.
Why do you think Costco folded so quickly? 
There were actually several articles in some of the business world press predicting Costco’s downfall from paying too much and being too generous with benefits.
Not seeing it. Not in #77, nor in any other posts.
You are making the claim that people in this thread said that it makes no economic sense for a company to increase its wages and benifits in order to attract and maintain a workforce.
I do not see a single post making that claim, did you have one in mind?
This is strange but the only thing I can think of is that you’ve excised the “due to the tax cut” part.
It didn’t occur to me that you might be doing that, since that’s obviously what we’re discussing, and as I said, the HR person said explicitly that the contemplated contribution freeze was part of a discussion of what to do with the tax cut windfall.
But that’s my only guess as to what you’re up to. And if that’s your game, then I’m not playing. (If you really did have some legitimate meaning, then please try to be more explicit going forward.)
That is the entire debate we are having, it’s not a side game.
Are the raises that companies are giving due to the taxcut, or due to a tightening labor market?
I have seen plenty of evidence of the latter, none of the former.
Yes, we have your anecdote that an HR person from a large company told you that the reason that they are being more generous with benefits is because of the tax cuts, but I have no reason to believe that the HR department of a large company would actually make a decision like that. They pay based on what they need to pay to attract and maintain a workforce. They do not pay more than that, even if they get their taxes cut so that they have more profits to share with their shareholders.
The only way that they are linked in any way is PR. There may be more and bigger benefits that go to workers due to the tax cut, because the companies want the PR of using the tax cut on employees, but they are not doing it because they have more money to spend on them. If that were the case, they would have already been paying them more, rather than passing the profits off to investors.
And I am sure that even you do not believe that 100% of the tax savings went to employee benefits. What percentage do you think of the tax savings of this particular company are going into keeping the health coverage flat for one year?
If you understood that this was the issue why did you decide to remove the “due to the tax cut” aspect, and claim that no one had said this makes zero economic sense?
Because the tax cut is irrelevant to giving out raises and bonuses and increasing benefit packages.
That’s my point.
It does make zero sense to give raises because you are more profitable. It does make sense to claim that you are giving raises because you are more profitable.
It doesn’t make any sense that anyone would believe an HR manager that makes that claim.
OK, but that’s no reason to act as if the claim being discussed was something other than what it was. That makes communication very difficult. If you knew that what we were discussing was the claim that the tax cut could trigger benefit enhancements, then you shouldn’t act as if the claim was something else.
As for your claim that this VP of HR, discussing internal company deliberations with no incentive to lie about anything, should be dismissed out of hand based on your claim that it makes no sense, I don’t think that’s worthy of a further response (especially in light of the prior paragraph). So we can leave it here.
OK
Lots of posts above saying that the bubble will burst this year next year… Were they unduly optimistic?
I figure it’s to cover the cost of the gun you’re bound to want to eat when you sit down with the sudden realization that you’ve been working as a lowly Wal Mart drone for 20 fucking years now.
My crashes are the biggest, best, yugest ever"
What crash? Fake news!
I work for a Walmart competitor. It’s run by an evil CEO a lot of people hate, but Trump hates him just as much. For some reason, they were already starting off around $15/hr w/access to health plans and 401(k), paid time off, vacation, etc from day 1. Plus I’ve gotten a bonus from $100-350 every month just for showing up. Plus RSUs, though I consider them extremely unlikely to be earned by myself or anyone who really works there. Looks like the stock took a little hit but it had increased by around 60% in the handful of months I’ve worked there. It’s a low-end job with a lot of issues as these jobs tend to have, but I appreciate they haven’t pulled one of these PR pay raises or one-time bonus of crumbs.
Also, I expect a tax increase from Trump because of the elimination of exemptions. The “doubled” standard deduction is less than my previous standard deduction plus exemption, by at least a few grand.
My own company just announced a tax-related pay raise for all lower paid workers plus a bonus for anyone making less than a certain salary. That doesn’t do anything for the higher paid workers, but their annual bonuses haven’t been communicated yet, so there’s hope that they will raise their funding for the bonus pool.
If your previous exemptions were due to children under 17, then you need to reflect that the per child tax credit has been increased significantly. (And that’s a tax credit, not an income deduction, so the impact can be substantial.)
If expected returns in an economy go up, a lot of marginal businesses suddenly become profitable. Those businesses compete for commercial space and rents go up. Similarly, if profitability generally goes up, you also have increased demand for labor. Whether that increased demand leads to significant increases in wages depends on what the labor supply looks like.
Employers are going to do whatever they can to keep wages down but they are competing with one another for resources and if increased demand makes the resource becomes scarce enough, they will bid up the price.
American employers have been holding the line on American wages for almost a decade and it doesn’t take an economist to see that cutting corporate taxes in half will increase corporate profitability and the demand for labor