More firms hiking worker pay, benefits
AutoNation boosts 401(k) bonus; offers fully paid cancer insurance
Major consumer companies, including AutoNation in Fort Lauderdale, are hopping on a train of enhanced employee givebacks following passage of a new law that chops corporate tax rates.
On Tuesday, AutoNation announced plans to double its contribution to workers who save for retirement through its 401k plan, and provide fully paid cancer insurance for employees and their families, as well as a financial benefit for those diagnosed.
The nation’s largest auto retailer is among the companies nationwide that have been issuing bonuses to employees, boosting company contributions to retirement, raising the minimum wage, or contributing extra to charity since Congress passed and President Donald Trump signed the tax code overhaul in December.
While some economists cheer the corporate moves to keep the economy expanding, and consumers benefiting, others see the corporate givebacks as public-relations maneuvering to curry favor with workers, consumers and the Trump Administration. They argue the companies are reaping benefits from the huge corporate tax rate cut — from 35 percent to 21 percent — all the while taking action mainly to improve their public image.
“The companies look better for the public. [People think] ‘this is a good company,’ ” said South Florida banking analyst and economist Ken Thomas.
Ultimately, anything a company does is about its stock price, said South Florida banking analyst and economist Ken Thomas.
“In Corporate America, the first priority is maximizing shareholder value. While this can often be done directly by increasing dividends or doing stock buybacks, the idea is that all of these other approaches will indirectly increase the stock price and earnings over time,” Thomas said.
Daniel Gropper, dean of the business college at Florida Atlantic University in Boca Raton, said the bonuses and other corporate announcements “prove the point that when there are tax cuts for corporations, they have an effect.”
He does note the tax law has provided opportunities for consumer companies that are “particularly interested in getting their name out there. It may help them with consumers … to be out in the news media in a positive way.”
The corporate moves also are aimed at recruitment, Gropper said. When companies enhance their compensation packages, it sends a signal that “we’re going to be a company that’s treating you well,” he said.
AutoNation said Tuesday it expects $70 million to $100 million in annual savings due to the new tax law. As a result, the company said it will pay fully for MetLife cancer insurance for employees, spouses and children up to age 26.
Only a small number of employer-sponsored cancer and critical illness insurance plans are fully paid by the employer, said MetLife spokeswoman Erin DeWaters.
The company also said it would match 50 cents of every dollar an employee contributes to the company’s retirement plan, up to 4 percent of eligible compensation. Previously, the match was half of up to 2 percent.
“We are excited about the pro-growth environment for business in the U.S., which includes the recently signed tax reform bill,” said AutoNation Chairman and CEO Mike Jackson, who last week was appointed chairman of the Federal Reserve Board of Atlanta. “As a U.S.based company, our employees, customers and share-