News and Events for Attorneys and Executives

Why Many Companies Are Giving Bonuses – Not Raises – After the New Tax Cuts

By on January 21, 2018 in Employment

Companies like Apple, American Airlines, Bank of America and AT&T have been giving bonuses to their workers in the wake of the new U.S. tax law, but fewer employers are putting their tax savings into a boost in base pay, points out Jena McGregor for The Washington Post.

“A number of companies, including Walmart and many banks, have announced increases to their minimum wage or other adjustments to salaries. But the number of companies offering bonuses — or who say they may do so — are thus far higher,” she writes.

She quotes Ken Abosch, the North American compensation practice leader for Aon: “Salaries represent the single largest percentage of direct labor costs [for employers]. Any time you give someone an increase in their salary, it’s an annuity. It’s not a one-time event like a bonus. It’s additive and it compounds.”

Read the Post article.