President Trump and Congressional Republicans got a pretty big win earlier this week when Apple announced it would be investing $350 billion into the economy in the coming years, creating a new campus to house technical support for customers and adding 20,000 new jobs.
CEO Tim Cook said, in an interview with ABC News, that the tax reform bill played at least some part in the announcement.
“There’s large parts of this that are results of the tax reform and there are large parts we would have done in any situation,” Apple CEO Tim Cook told ABC News Wednesday.
“There are two parts of the tax bill. There’s a corporate piece and an individual piece. I do believe the corporate-tax side will result in job creation and a faster-growing economy,” Cook continued.
I hope he’s right. I’ve been skeptical about the tax reform bill, in large part because, over time, it certainly benefits more wealthy Americans on an individual level than it does the middle class.
How history treats the bill, however, will be in large part determined by its long-term effects on the economy and job creation. And again, there are plenty of reasons to be skeptical about that, even in light of this news from Apple and other large companies that announced bonuses for workers in light of the bill’s passage in December.
Look no further than to Kansas and California in 2012. Kansas approved major tax cuts for business owners and top earners, but fell below the national average in economic growth and job creation, leading to cuts in education and other services. California raised taxes on its highest earners, but has seen stronger economic growth than any other state since.
Still, $350 billion and 20,000 new jobs is nothing to shake a stick at. But what will really energize the economy is if corporations don’t just create new jobs, but focus on improving wages.
Tell me if you’ve heard this one in your workplace: Do more with less. Typically, this is what you’ll hear from management when there are cuts, often by attrition, and remaining workers have to take on the responsibilities of those who have gone. We’re certainly no strangers to this in the newspaper business.
What never seems to follow those additional responsibilities, though, is wage increases.
Do more with less … for the same salary.
Theoretically, job creation could lead to wage increases. After all, if there are more jobs available, then employees have more options to go and work. Companies who value their best workers will, again theoretically, pay more to retain them. When fewer jobs are available, then employers have an easier time retaining workers without offering raises, even if they pile on more duties and responsibilities.
But will companies give raises to loyal employees who have gone without for years thanks to the tax cuts, as Trump promised?
Don’t hold your breath, if a recent CNBC survey of S&P 100 companies is accurate. The survey asked the 100 companies if they would use money saved from the corporate tax cuts to increase worker pay or invest in charitable causes. Just nine answered “yes.” If you work for AT&T, Walmart, Wells Fargo, Comcast, Boeing, Bank of America, PNC Financial or U.S. Bancorp, congratulations! Although only two of those, Walmart and Wells Fargo, said they planned to raise pay for some workers permanently; others plan to dole out one-time bonuses.
Forty-two of the other firms responded with no comment or a generic statement that didn’t specifically answer the question. So there’s that.
Stagnant wages have been a trend since the 1970s, and since that time, worker productivity has grown at almost six times the rate of worker pay, according to the Economic Policy Institute.
The fix is simple enough: Pay people more money, they’ll have more money to buy stuff and the economy will grow.
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If the corporate tax cuts trigger job creation and significant wage growth, history will look fondly upon it. Hopefully, Apple’s announcement is the start of a very positive trend. But, again, I won’t hold my breath.