On Wednesday a handful of U.S.-based corporations, with AT&T leading the way, announced that, in light of the recently passed tax bill, they will be giving their employees a one-time bonus. Before anyone else begins claiming that this tax bill is going to spur business investment and favor the working class, let’s remember a few important points.
These bonuses weren’t selfless gifts
AT&T, which has been in a highly-publicized battle with the Trump administration on their proposed merger with Time Warner, was the bellwether of the bonuses. By being the first company to give over 200,000 of their employees $1,000 bonuses, they made President Trump look like the populist he pretends to be, which, perhaps, gets them back into his good graces as the Justice Department’s moves forward (or not) with its lawsuit.
The AT&T bonus is also a result, according to The Washington Post, of conversations between AT&T’s CEO Randall Stephenson and Communications Workers of America President Christopher Shelton. In other words, being the first company to break ranks and hand out bonuses is, at least partially, the outcome of a largely unionized workforce and labor representatives who negotiated for that bonus.
AT&T, and American corporations in general, didn’t need a tax break to increase pay
AT&T’s Stephenson claimed his company’s apparent generosity was possible because of the tax bill. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.” In short, this statement implies that AT&T needed the 14 percent cut in their corporate tax rate to afford paying their employees more. But this couldn’t be further from the truth.
AT&T made close to $87 billion in profits last year and, over the past 10 years, has spent $50 billion on stock buybacks—a now-common corporate practice that pushes up stock prices by using excess cash (and sometimes even debt) to repurchase their own shares for the benefit of both shareholders and options-laden executives rather than paying workers more and investing in research and innovation. AT&T is the most intense practitioner of buybacks in the telecom industry and consequently, falling behind in innovation. Their CEO made almost $25 million in 2016, over 300 times the average wage of their workers. As with most U.S. public corporations, AT&T has shifted from a more worker-oriented capitalism of the mid-twentieth century to today’s shareholder capitalism, which means that a lack of corporate funds was not what was holding AT&T back from investing more in their technology and their workers. Rather, it was the pressure to cut costs and return even more profits to shareholders.
These companies are outliers for paying bonuses—but are entirely typical for putting shareholders first
AT&T, Comcast, WellsFargo, and the handful of other companies doling out bonuses are not setting a trend that substantiates the Republican line that the tax plan will boost business investment and job creation. What many analysts expect and what many public companies themselves have indicated is they will use the largesse for business as usual, meaning they will substantially increase their buybacks and dividends programs, rather than investing in initiatives that spur shared, long-term growth, like research and development (R&D) spending, capital investments, and spending on new hiring and raises.
When the GOP is done wreaking havoc on our public institutions, that extra $1,000 isn’t going to go far
The tax bill will make life more expensive for poor and working-class Americans in many ways, making the extra money that these companies are giving their employees more necessary–and also worth less. In addition to any potential impacts the effective repeal of the Affordable Care Act’s individual mandate will have on health costs more broadly, the bill’s $1.5 trillion tab will give GOP lawmakers cover for slashing public services they’ve long wanted to cut. This isn’t speculation. Paul Ryan and a number of other lawmakers recently made clear they’ll address the deficit crisis of their own making by taking up “entitlement reform,” and by reform they mean decimation. As the National Women’s Law Center recently reported, the anticipated cuts would radically reshape Medicare, Medicaid, food assistance, and child care and student loan programs. Bryce Covert wrote in The New York Times this week that cuts would likely impact an even wider range of programs including the Women, Infants, and Children’s Program (WIC) and Meals on Wheels. These cuts would likely have spillover effects, impacting not only the individuals who directly rely on them, but their families and communities more broadly.
Workers deserve this bonus. And a whole lot more.
Of course, any additional pay workers receive is good news and will have a meaningful impact on their pocketbooks. But, in this corporate landscape, when profits have vastly outpaced their pre-Great Recession levels and wages have stagnated, bonuses alone feel like a consolation prize. Workers, who contribute so much to corporate profitability, deserve much more, including job security, meaningful raises and health benefits, paid family leave, and all the hallmarks of an era when corporations indeed fulfilled their roles as job creators and engines of economic growth. In fact, if we really want workers to benefit when companies profit, we need to structure companies differently and put workers in the driver’s seat or, more literally, in the boardroom. The GOP tax bill is not going to deliver us into another era of economic prosperity that elevates workers and the middle class. Rather, it will drive us further away from a strong, inclusive economy that serves the many—and not just the few at the very top.