What companies are really doing with their tax windfall

The GOP tax overhaul has inspired what seems like a flurry of action from companies looking to gain billions of dollars in potential savings. Every day, a new organization announces bonuses and wage increases. (FedEx Corp. on Friday added its name to that list.) Others, however, are using their funds to lay off thousands of workers.

Despite the headlines, it turns out most companies aren’t doing much at all with their tax savings, according to a new survey from Willis Towers Watson. At least not yet.

The HR consulting firm asked 333 employers with at least 1,000 employees what they have done or plan to do as a result of the Tax Cuts and Jobs Act. Only 4 percent of companies said they had “increased wages for all employees”; an additional 3 percent said they planned to do so in the next year. While a further 13 percent said they’re “considering taking action this year or next,” a full 80 percent of companies aren’t considering giving raises at all.

“Companies are really spending time thinking about this,” said John Bremen, a managing director at Willis Towers Watson. “They’re trying to figure out what to do in terms of what’s going to be highest impact and greatest value.”

Bremen sees three general trends among employers. One group is using the tax bill windfall to make previously planned investments, such as raising the minimum wage or increasing 401(k) contributions. Another group is trying to modernize their workforce by hiring new kinds of workers. The third group is attempting to keep up with the proverbial Joneses: As companies see their competitors offering headline grabbing bonuses, they feel compelled to do the same.

At this rate, it’s too early to tell what the trickle-down impact of the bill will be, if any. The bonus and wage increases provided to employees have, so far, been a fraction of the savings companies are seeing from the tax bill. It will take years to determine the full impacts of the bill, economists say.