Who is benefiting from tax-cut windfall?
Companies vowed to create jobs and raise wages; now unions want details
Big unions are challenging American companies to show them the taxcut money.
Before the sweeping tax cuts were passed late last year, major U.S. corporations joined President Trump and Republicans in Congress in vowing the reform would grow the economy, create jobs and raise wages. Since then, many have boosted minimum wages, doled out bonuses and increased spending and charitable giving.
But the unions want companies to go a step further. As part of ongoing contract negotiations or talks set to begin within months, unions including the Communications Workers of America, Service Employees International Union and the American Federation of Teachers are asking companies such as AT&T and American Airlines to reveal how much the tax overhaul will fatten their profits and what they plan to do with the windfall. They’re demanding that the companies specify the portion of the gains that will be used to boost wages, bring back jobs from overseas and make capital investments as well as the amount going toward increasing executive pay and buying back stock.
Some information, such as the amount a company pays in income taxes, is publicly available but not typically until it files its annual report the following year.
“President Trump and the Republican Congress promised that billions of dollars in corporate tax giveaways would ultimately raise wages and bring jobs back from overseas, but a union contract is the only way to get that promise in writing,” says Chris Shelton, president of the Communications Workers of America.
The tax overhaul lowered the corporate tax rate from 35% to 21% and allowed for the immediate deductions of capital investments.
The CWA is in contract talks with AT&T on behalf of workers for the company’s long-distance service and local operations in the Midwest and has sent letters requesting the information from those divisions. CWA sent similar letters to Nexstar Broadcasting, which owns local TV stations, and two American Airlines subsidiaries, Piedmont Airlines and Envoy Air.
Service Employees International Union and the American Federation of Teachers requested similar information from several health care providers, including Consulate Health Care, Kindred Healthcare and Fresenius Health Care. And the Teamsters want to know how the tax cuts will benefit the Pepsi’s Frito-Lay unit in Ohio.
In total, letters were sent to about 10 companies in current union negotiations that could affect 30,000 employees. However, the unions represent a total of nearly 6 million workers, and some portion of those could be affected by similar demands for information ahead of future contract initiations, CWA attorney Jennifer Abruzzo says.
“We are deeply concerned that these promises will be forgotten unless we bargain to implement them,” the CWA said in its letter to AT&T.
❚ AT&T says information isn’t relevant: AT&T, however, has refused to turn over the information, saying it’s not relevant to the contract talks.
“The company objects to these requests on the grounds that they seek information that is irrelevant, immaterial and pertain to matters wholly outside” collective bargaining, Randall White, vice president for AT&T’s Midwest unit, wrote to CWA executive Curt Hess in a March 22 letter.
“It is relevant and necessary for us to fine-tune bargaining proposals so the company can be profitable but workers can also make a decent wage,” Abruzzo says. The unions say they could file complaints with the National Labor Relations Board if the companies don’t provide the requested data.
Nancy Kalin, a spokeswoman for Envoy Air, told USA TODAY, “We are currently involved in negotiations with our passenger service agents, so we feel that it is not proper to publicly discuss information which may be exchanged at the bargaining table.”
Companies in contract talks are obliged to turn over relevant information to unions, but the question of what meets that test “is an age-old debate,” says Kate Bronfenbrenner, director of labor education research at Cornell University. If a company promised to raise wages if taxes are cut, “they may have opened themselves up to making that in the realm of something the union has the right to bargain for” and seek relevant information, Bronfenbrenner says.
In early November, AT&T vowed to invest an additional $1 billion in the U.S. if Congress passed the reform, with CEO Randall Stephenson saying the law would spur job creation and economic growth. After Congress passed the overhaul, AT&T said it would provide $1,000 bonuses to more than 200,000 employees if Trump signed the bill into law. The company promptly followed through.
More than two dozen companies committed to similar worker bonuses, including Bank of America, Comcast, Starbucks, Apple and Home Depot.
❚ Tax-cut vows could bite later: Bronfenbrenner says promises of bonuses could invite a wider request for information on wage increases. And even politicians’ pledges of the tax cut’s benefits could justify demands for certain information if companies in contract talks lobbied for the legislation, she says. But she adds the requirements are murky, and the NLRB would make decisions on a case-by-case basis.
The union letters remind the companies that President Trump promised the tax cut “will give the typical American household a $4,000 pay raise” and that the Council for Economic Advisors (CEA) said the raise “may be as high as $9,000.” The letter to AT&T singles out Stephenson’s assurance that lower taxes drive more hiring and bigger wages. It adds that one-time $1,000 bonuses “are no substitute for the promised $4,000 permanent income boost.”
The CEA, however, said the higher pay would flow to workers over five to 10 years through increased capital spending that lifts worker productivity — not through bigger paychecks in the short term.
Even if companies disclose the information the unions are seeking, that doesn’t mean they’ll agree to their contract demands, Bronfenbrenner says.