When Congress passed a $1.5 trillion tax overhaul last year, supporters justified major corporate tax cuts by claiming the money companies saved would trickle down to America’s workers. It’s still too soon to tell whether that theory will prove accurate. But there are some data points that indicate how the economy is trending almost a year after the Tax Cuts and Jobs Act was signed into law.
Here’s what’s happened for U.S. employees since tax reform nearly one year ago.
750 companies have proposed to use the money they’ve saved through tax cuts to benefit their employees, whether through bonuses, raises, or other methods. Already, some workers have seen more green in their bank account because of the law.
Just Capital, a nonprofit monitoring how 1,000 large companies are spending their tax cuts, estimates an average employee at one of those businesses has seen a bump of around $225 this year that’s linked to the act, according to the New York Times.
The Labor Department announced inflation-adjusted wages were up by 0.5% in September. But that growth is actually lower than in 2017, before tax reform was enacted.
Hirings and firings
The unemployment rate has been steadily declining since 2011 (from a high near 10%) when the economy started recovering from 2008’s Great Recession. The Bureau of Labor Statistics indicates that the U.S. unemployment rate was 3.7% in October 2018, and 250,000 jobs were created during that month.
However, Just Capital discovered a surprising nuance within the booming economy: The large public businesses they study have created 73,000 jobs but also gotten rid of nearly double that number.
Some of these trends may not be a direct result of the tax cuts, which take time to manifest fully. Correlation does not imply causation, and the U.S. economy is privy to a lot of factors beyond tax reform that influence its success or failure.
But for now, these are the takeaways American workers can infer from preliminary data about the tax cuts and what they mean for them. Now, it’s time to get up the gumption to ask for that raise — even $225 more a year can make a difference.