Will Recent Bonuses in the Wake of Updates to the US Tax Law Affect Recruiting?
The Federal Government introduced the largest corporate tax overhaul seen in 30 years.
This prompted many American corporations to announce and distribute bonuses to their employees in a show of support and good faith:
- Wells Fargo
- JP Morgan
- Home Depot
- American Airlines
Clearly, these companies want to ensure that they offer competitive packages for their employees—and are willing to put their money where their mouths are.
Job-seekers currently in the market have asked if this affects their prospects in finding a new job.
Little or nothing will change for most job seekers. If anything, things will improve. Companies paying bonuses instead of salaries won’t create a negative impact on recruiting practices, but it might just tip the scales in favor of current job seekers.
What Changed in the Tax Code?
The Federal government lowered the corporate tax rate from 35% to 21%.
Many large employers announced bonuses soon after the bill passed, promising to distribute sums between $500 and $1,000 to employees across the board.
Numerous changes have been made for personal tax protocols that may have an impact on individual employees’ financial situations, including:
- Standard deductions for single and married taxpayers
- Child tax credit deductions
- Limits on state and local taxes
- Raised contribution limits for retirement savings
It is the company bonuses that have job seekers wondering about their odds at finding a new job, however.
Will Recruiting Change After Bonuses Have Been Distributed?
The string of bonuses won’t affect recruiting practices. Here’s why.
52% of Americans did not get a raise over the past 12 months despite the growing economy. However, the remaining 48% who did see raises earned them by finding a new job or receiving a promotion.
The data indicates that job seekers are actually in a better position to receive a raise than existing employees within a given company.
Experts such as Daniel B. Kline suggest that the bonuses will keep existing employees happy.
Statistically, current employees don’t leave their jobs even if they don’t receive raises. The bonuses may build goodwill with the workforce without investing too much money into longstanding programs, benefits, or employee development initiatives.
The Bonuses Might Even Help Current Job-Seekers
This kind of bonus will appeal to junior and mid-level employees on the fence about moving somewhere else, but little will change about recruiting otherwise. The bonuses only highlight the fact that a job seeker’s best chance at a raise comes from finding a new position with a new employer.
This is because companies still tend to pay new hires more money than employees promoted internally. That trend hasn’t changed under the new tax legislation.
This doesn’t have a direct impact on recruiting practices or outcomes, although it may create slightly favorable odds for people job-hunting right now. Every employee who stays in his or her current role after receiving a bonus stays out of the competition for job-seekers in the same market.
Talk to a specialist in recruiting at the Career Path Group and take your next step while others stay in the same spot.