The numbers are in: the American worker got an average bonus increase of one cent in 2018.
“Data from the Bureau of Labor Statistics’ Employer Costs for Employee Compensation gives us a chance to look at workers’ bonuses in 2017 and 2018, to gauge the impact of the GOP’s Tax Cuts and Jobs Act of 2017. Last year, our analysis showed that bonuses rose by $0.02 between December 2017 and September 2018 (all calculations in this analysis are inflation-adjusted). The new data show that bonuses actually fell $0.22 between December 2017 and December 2018 and the average bonus for 2018 was just $0.01 higher than in 2017.
This is not what the tax cutters promised, or bragged about soon after the tax bill passed. They claimed that their bill would raise the wages of rank-and-file workers, with congressional Republicans and members of the Trump administration promising raises of many thousands of dollars within ten years. The Trump administration’s chair of the Council of Economic Advisers argued last April that we were already seeing the positive wage impact of the tax cuts:
A flurry of corporate announcements provide further evidence of tax reform’s positive impact on wages. As of April 8, nearly 500 American employers have announced bonuses or pay increases, affecting more than 5.5 million American workers.
Following the bill’s passage, a number of corporations made conveniently-timed announcements that their workers would be getting raises or bonuses (some of which were in the works well before the tax cuts passed). But as EPIanalysis has shown there are many reasons to be skeptical of the claim that the TCJA, particularly its corporate tax cuts, will produce significant wage gains.
The new data for December 2018 allows us to examine nonproduction bonuses in every quarter of 2018 to assess the trends in bonuses in absolute dollars and as a share of compensation relative to both December 2017 and 2017 as a whole. The bottom line is that there has been very little increase in private sector compensation or W-2 wages since the end of 2017. W-2 wages actually fell 2.0 percent from December 2017 to December 2018, and total compensation fell by 0.9 percent. W-2 wages and compensation in 2018 were imperceptibly higher, growing, respectively, by 0.2 and 0.1 percent.”
For the rest of the story, visit the Economic Policy Institute here.