US companies announce US$1,000 worker bonuses after tax cut

AT&T plans to give US$1,000 (S$1,340) bonuses to more than 200,000 workers and will issue the cheques over the holidays if President Donald Trump signs the Bill before Christmas.
AT&T plans to give US$1,000 (S$1,340) bonuses to more than 200,000 workers and will issue the cheques over the holidays if President Donald Trump signs the Bill before Christmas.PHOTO: REUTERS

NEW YORK (AFP) - AT&T and Boeing were among the large US companies that announced new spending on their workers on Wednesday (Dec 20) after Congress approved a sweeping US tax cut.

AT&T plans to give US$1,000 (S$1,340) bonuses to more than 200,000 workers and will issue the cheques over the holidays if President Donald Trump signs the Bill before Christmas.

The company also said it plans to invest an additional US$1 billion in 2018 on account of the Bill.

"This tax reform will drive economic growth and create good-paying jobs," AT&T chief executive Randall Stephenson said. "In fact, we will increase our US investment and pay a special bonus to our US employees."

The handful of announcements came after the House of Representatives approved the US$1.5 trillion tax overhaul, sending the measure to President Trump to sign into law.

Democrats criticised the Bill as a budget-busting sop that mostly benefits the very wealthy, while Republicans argued it would boost economic growth.

Boeing announced US$300 million in additional spending that includes funds for workforce training and to upgrade facilities to the "workplace for the future".

"We applaud and thank Congress and the administration for their leadership in seizing this opportunity to unleash economic energy in the United States," Boeing chief executive Dennis Muilenburg said.

"It's the single-most important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country."

Fifth Third Bancorp said it would boost its minimum wage for all employees to US$15 an hour and distribute a one-time bonus of US$1,000 to more than 13,500 employees.

Still, many analysts and economists have expressed scepticism that the tax Bill will boost growth as much as promised.

The tax cut "will improve corporate profits and that, in turn, will increase share buybacks and dividends more than it actually increases economic activity", said Karl Haeling, portfolio manager at LBBW Asset Management.

"Big companies have a lot of money right now," he said. If they needed to build a big plant, they would not have to wait for the tax reform, he added. "I'm still sceptical that it really does that much."