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Remember the tax-cut bonuses?

Two years ago, after President Donald Trump and the Republican Congress approved a new tax law, hundreds of companies said they would share the bounty with workers.

AT&T, American Airlines, Comerica and Southwest Airlines were among the companies doling out $1,000 bonuses. Other major employers, including Walmart and Bank of America, joined in.

In all, over $4 billion in tax-cut bonuses were promised to over 5 million workers, according to Americans for Tax Fairness.

That sounds big – and a steady stream of companies made headlines for weeks after the tax law passed. But the upside hasn’t been sustained despite a strong economy and low unemployment.

After the tax cuts, bonuses for private-sector workers rose almost 12% compared with the third quarter of 2017, according to data from the National Compensation Survey by the U.S. Bureau of Labor Statistics.

By late 2018, however, those gains were gone, and employer costs for bonuses had declined 25%.

“There is zero evidence that the highly publicized bonuses were any kind of lasting change,” said Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy in Washington.

He said it’s too soon to measure some effects of the tax law, given that it’s been in place for only two years and data often lags.

“But one thing we know is that the bonuses were a temporary thing and not a lasting measure of generosity on the part of these companies,” Gardner said.

After the tax cuts, bonuses rose to 2.8% of total pay, the highest level since at least 2004. That mark held for three quarters, and then the share declined to 2.1%, where it has remained for a year.

In September 2019, the most recent period for the BLS data, the share of pay going to bonuses was the lowest in five years.

The Tax Cuts and Jobs Act reduced the federal corporate income tax rate from a maximum of 35% to 21%. It also offered other tax breaks for capital projects and repatriating profits from abroad. According to a recent study by Gardner, the profitable companies in the Fortune 500 paid an effective tax rate of 11.3% in 2018, far lower than in previous years.

The extra cash from tax savings and repatriated funds helped companies invest record sums in buying back their shares. If the tax-cut bonuses topped $4 billion, as one group said, that would be less than 3% of the corporate tax cut and a smaller share of repatriated funds, the Congressional Research Service said.

“While evidence does indicate significant repurchases of shares, either from tax cuts or repatriated revenues, relatively little was directed to paying worker bonuses,” researchers for the group wrote in a May 2019 report.

The White House Council of Economic Advisers predicted that corporate tax cuts would eventually raise the average household’s income by $4,000. An increase of $1,500 to $2,900 in higher disposable income has already resulted, the council said last month.

It cited the combination of corporate tax cuts and changes to individual taxes, such as doubling the child tax credit.

Wages have been growing for many years, increasing faster than inflation for much of the past decade. The trend continued after the tax cuts, but growth rates have started to slow, trailing inflation in recent quarters.

“With the unemployment rate so low, it’s disappointing that we’re not seeing strong wage growth,” said Seth Hanlon, a senior fellow at the Center for American Progress, a progressive policy think tank. “The power balance is still out of whack between employers and workers.”

Proponents of corporate tax cuts said they would make U.S. companies more competitive and lead to more business investment, which would stoke more competition and bump up pay.

But business investment has been slowing since early 2018. And Hanlon said he believes that explains the deceleration in wages.

In Friday’s jobs report from the BLS, which involves a different survey than the one used for tracking bonuses, average hourly earnings for all employees rose 2.9%. A year ago, the same metric rose 4.1%.

Some sectors have increased pay at a faster clip, including oil and gas, manufacturing, and professional and business services. And bonuses remain a key part of compensation for many workers.

More manufacturers are offering bonuses to lure workers to their town because demand for certain skills far exceeds the supply, The Wall Street Journal reported. Companies are especially eager to entice welders, engineers and machine programmers.

Recruiters said it is all about the war for talent and the shortage of skilled labor. The tax cuts of 2017 weren’t mentioned in the story.

Two years ago, when tax-cut bonuses were all the rage, former Treasury Secretary Larry Summers called them “a gimmick.”

Companies had to pay more because of the tight labor market and bonuses were a way to do it without locking in higher costs, he said. They also could curry favor with the president at the same time.

“Look, the corporate tax cuts are going to be forever,” Summers told CNBC. “If the firms really believe this had to do with corporate tax cuts, why aren’t they committing to bonuses forever?”

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