With Corporate America finally getting their wish for a lower headline corporate tax rate fulfilled, a recent poll by Willis Towers Watson shows how the decision makers plan to spend their new windfall from the Tax Cuts and Jobs Act.
The survey of 333 large and midsize employers reveals the following plans by category:
1.) 66 percent are planning, considering or have already taken action on making changes to their benefits programs.
2.) 34 percent are planning or considering expanding personal financial planning.
3.) 26 percent are planning or considering increasing 401(k) contributions.
4.) 19 percent are planning or considering increasing or accelerating pension plan contributions.
6.) 43 percent are planning or considering conducting a review of their compensation philosophy.
7.) 36 percent are planning or considering addressing pay-gap issues.
8.) 21 percent are planning or considering introducing a profit-sharing or one-time bonus payout to all employees.
9.) 41 percent are planning, considering or have already taken action to change their executive pay programs.
10.) 33 percent are planning or considering spending more time and analysis on this year’s incentive targets.
11.) 19 percent are planning or considering increasing the use of discretion in 2018 executive compensation plans.
According to Bloomberg, only 4 percent of companies stated that, in light of the Tax Cuts and Jobs Act, they had raised wages for all employees and an additional 3 percent stated that they planned to do so in the next year. In contrast, 80 percent of companies stated that they aren’t giving any raises whatsoever.
Now, let’s look at another poll by Willis Towers Watson which shows us where Corporate America could be (and should be) spending at least some of their new tax lottery winnings. According to a 2017 year end poll of 389 Fortune 1000 companies that sponsor defined benefit pension plans with a year end of December, the funding levels of private defined benefit pension plans has not improved significantly since the depths of the Great Recession as shown here:
While Corporate America is delighted with the prospect of lower taxes, unless executives start taking significant measures to roll back their defined benefit pension plan deficits, Main Street America will find that the “shiny, one time baubles” that are offered by a relatively small fraction of American corporations thanks to the Tax Cuts and Jobs Act will pale into insignificance when it comes to retirement time. With only 19 percent planning or considering increasing pension plan contributions as a result of the new lower corporate tax regime, it looks like it’s going to be a cat food future for millions of American workers.
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