While much has been written about the current economic boom and low unemployment, another picture has emerged showing wages barely keeping up with inflation and middle class families still struggling to get ahead. Why is that?
For one, wages didn’t increase as was promised from companies that are enjoying sky-high profits in part due to the federal tax overhaul.
Some companies said instead of increasing wages, they would award better bonuses or pump up employee benefits. But as the dust settles on the tax giveaways, it’s becoming increasingly clear: not only are wages off the table, increased benefits seem to be, too.
In fact, retirement, health insurance, leaves and other benefits have remained flat over these last few years, according to economists at the Economic Policy Institute. In March of this year, paid leave made up 7 percent of workers’ compensation, which is about the same as it was 10 years ago at 6.8 percent.
A research group called Just Capital said of 1,000 public large companies, that the average worker gained $225 this year in salary and bonuses. In fact, a survey of 1,000 big companies in the private sector say they’ll be cutting back on bonuses in 2018.
Lawrence Mishel, an economist at EPI said: “The reality is that wages, benefits and bonuses are all slow to grow. Workers are still waiting to see a payoff from the recovery.” Read the complete article here.
Many experts believe the tax cuts would at least unleash capital expenditure by companies to invest in things like new machinery and technology. And it looked like it did in the short term, at least in the first quarter of this year. But now in the third quarter, those gains look short-term, with capital expenditures looking tepid at best, and most businesses indicating they do not have plans to change their investments.
Even more concerning about the tax cuts is what they appear to be doing to the U.S. economy. While supporters claimed the cuts would be revenue neutral, the U.S. budget deficit has surged by a whopping 17 percent this year.
While it may take a while to determine the measure of these tax cuts, at least for now, there seems to be only nominal gain for the majority of workers.
Read more here.