Politics

Workers’ Bonuses Decline 22 Percent Despite Tax Cuts, Wages on Decline

The Economic Policy Institute has found that workers’ bonuses have declined 22 percent since 2017. Using Bureau of Labor Statistics data, the EPI found that wages were equal to just .72 cents per hour. This compares with .88 cents in 2017 and .90 cents in early 2018.

This also marks the lowest level observed for bonuses since the summer of 2014. Interestingly, the decline in bonuses comes even as companies save billions of dollars on taxes. The data suggests that bonuses temporarily made gains due to the tax cuts but now seem to be settling at a lower level.

Worse yet, a fuller analysis of wage compensation found that private sector wages and W-2 wages both declined by nearly 1 percent since the tax cuts. W-2 wages in March, 2019, came in at $27.44, below the $27.79 observed in December 2017, for example.

While the tax cuts were lauded by the GOP as they were being passed, many Republicans have since avoided talking about them. When passing the tax cuts, many Republicans argued that the cuts would stimulate the economy and result in wage growth. The data now suggest otherwise. Republicans also argued that the cuts would pay for themselves but so far that appears to be false.

The one area the tax cuts do appear to have stimulated is stock buybacks. Companies are finding themselves with surplus cash in hand and thus far appear to be using that money to buy up shares in their own company. In 2018, stock buybacks surged to $806.4 billion dollars, up 55 percent from a year prior.

Many have pointed to the low unemployment rate as evidence of the economy’s strength. However, if wages are also declining or stagnating, the economy might not be so strong for the average American after all.

The opinions expressed here by contributors are their own and are not the view of OpsLens which seeks to provide a platform for experience-driven commentary on today's trending headlines in the U.S. and around the world. Have a different opinion or something more to add on this topic? Contact us for guidelines on submitting your own experience-driven commentary.
Brian Brinker

Brian Brinker is a political consultant and has an M.A in Global Affairs from American University.

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