In the wake of recently passed and signed federal tax changes, several companies have announced one-time bonuses and raises for employees.
Walmart is the latest company to make such an announcement. On Thursday the retail giant said it will boost starting wages for U.S. employees to $11, expand maternity and parental leave and pay cash bonuses of up to $1,000.
The benefits will go to more than 1 million of its U.S. employees, Walmart said. The giant retailer has more than 3,400 employees in the Dayton region and 29,000 in Ohio.
“We appreciate how they work hard to make every day easier for busy families,” Doug McMillon, Walmart president and chief executive, said in a statement.
Walmart spokeswoman Anne Hatfield said in an interview that the just-announced measures are “important benefits to families” and a way to recognize employees.
“We know that it’s our people who make the difference,” she said.
She disagreed that the investments are mere publicity stunts or a bid for good PR. They amount to serious, broad investments, she said.
“We’re providing a $300 million (wage) increase and bonuses of approximately $400 million to our hourly associates,” Hatfield said.
Other companies have made similar announcements. Fifth Third Bancorp boosted its minimum wage to $15 and made 13,500 employees eligible for a $1,000 bonus. PNC Financial Services Group, Inc. said it will pay $1,000 bonuses to more than 47,000 workers, raise its minimum wage to $15 and add $1,500 to employee pension accounts.
Bob Shaffer, Fifth Third’s chief human resources officer, said the raises and bonuses come from money that otherwise would have gone to Washington, D.C. in the form of tax payments.
“They’re absolutely meant to be investments in our employees, in our company,” he said. “They’re absolutely not publicity stunts.”
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Economists have argued that shareholders will see by far the biggest benefit from the recent tax package.
“The bulk of the corporate tax cuts should accrue to people who hold stock in companies,” Ethan Harris, chief economist at Bank of America Merrill Lynch, told the Chicago Tribune.
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AT&T, Boeing, Wells Fargo and several other big companies have made their own pledges and announcements.
Chris Kershner, executive vice president of the Dayton Area Chamber of Commerce, said in general, what’s meaningful for companies when it comes to tax reform are reduced taxes and government regulations.
“Just get out of the way,” Kershner said. “Let business owners keep more of their money.”
He agreed that raises by one company often have a ripple effect and competitors within the same industries will take notice of raises announced by others.
“Yes, in a competitive business world, those changes will be noticed by other companies. And simple economics tell us that those companies will react,” he said.
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But a lighter load of taxes and regulations matters most, he said.
“What’s important for us is to see that more resources are remaining with the business owners to make strategic investments as they see fit,” Kershner said.
Jeffrey Haymond, dean of the School of Business Administration at Cedarville University and an associate professor, said many companies have been making solid profits for a while, even ahead of the recent tax package. Much of what is being announced is “not directly related to the tax bill,” he said.
“I think this is a little bit more of public relations (move) on the part of some companies,” he said.
The real economic news, as Haymond sees it, is the potential for increased business investments. If tax changes lead to greater investment, that could lead to productivity gains, which in turn could lead to sustained wage growth, he believes.
“That’s what will drive wage growth,” he said. “It’s that old adage, a rising tide will lift all boats.”
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