Lets maybe give it more than two quarters…
*How’d they control for all the new tariff’s and trade uncertainty (war) with China?
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Lol I mean we can give it as long as you want. Only a company that wants to fail is going to put those tax cuts into higher wages when they know there’s a decent chance they disappear when the Dems regain control.
Probably the same way the stock market did. Small freakout the first couple tweets and now they’re calling his bluff
I would at least give it an entire business cycle. Things take time, I’m not sure what people expect. We’re a medium size company and we spent like 8 months and 500 meetings/phone calls talking through MD’s minimum wage hike.
Not to mention, this only impacts about 1% of companies in the US anyway.
I wouldn’t go that far and, at this point, I think we all know both parties are full of it when it comes to the economy/taxes/jobs.
The stock market is one thing. Investors are fickle. Planning for a direct impact on COGS internally is another thing entirely.
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Not only that. With unemployment nearing <3% and the market for labor at all levels tightening wages can only go up (for in demand jobs that is).
I’ve had several headhunters tell me they’ve never had this easy a time getting clients and job reqs, and never had it this hard finding candidates. If demand>supply then the price must go up.
I’m interested to see if they keep limiting H2B visas and ICE keeps cracking down on illegals what will happen to wages at the lowest quartile. It should either help with unemployment/wages for the poor, or incentivise automation. Probably both.
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Agreed. This is basically the inverse of what I was trying to explain to Zeppy in his thread. The biggest grey area, though, is the amount of people that have left the work force (true unemployment). I don’t know what that number is.
I’m not even sure limitations of visas/illegals matter in regard lowest quartile of wages and automation. We’re closing in on the breakeven on the automation of low skill work. I haven’t looked into automation costs all that much so I could be way off, but my gut says I can’t imagine wages rising beyond say $15/hr ($30k) before automation becomes a viable option, for low skill work, from a cost perspective.
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I’m happy to give it more time. Tbh I’m not sure how anyone expected the tax cuts to result in higher wages without Dem buying.
I think theoretically lowering every companys tax rate was supposed to impact 100% of companies in the US
Absolutely. But since the GOP is the one in power, they’re full of shit while the Dems are theoretically full of shit.
Hopefully those plans ackowledge the tax cuts stay ONLY in a scenario where Dems never regain control of DC. Given how quick companies were to spam stock buybacks they won’t need another talking point as to how tax cuts mostly benefit the rich (duh).
This worker demand is a couple years old at this point.
Medium/long term I agree since it’s unlikely the lower rates will last a party swap in Congress or POTUS. I’d like to see the corporate tax eliminated personally.
Only C corps pay corporate income tax and less than 1% of US businesses are registered C corps (iirc). In theory, lowering individual income tax rates were supposed to impact all businesses (since profit passes through to the individual income level), but I don’t remember what the plan did to businesses deductions.
I expected tax savings to go towards capital projects, not wage increases (not sure if that is the case or not); however, while capital projects don’t increase wages, they do increase jobs (both temp and permanent). So, they might not directly impact wage levels they do, generally, impact employment. Still a good thing, imo (not saying you’re taking the opposite position or anything).
I think the bigger issue in this country in terms of employment is under-employment perceived or true, personally.
Agreed
In theory, it was only for the higher tier tax brackets though. Even the theoretical models werent doing anything of substance for people sub 70kish iirc, but don’t quote me on that
I don’t think it messed with them THAT much. There was some consilidation done but I think it was supposed to be tax neutral
Sure, temporarily. But the shortsightedness of giving tax breaks to companies so they can afford more automation with an end goal of savings and lower workers seems like the opposite of the original goal
Ya it’s so hard to quantify that. Especially given how my generation developed a hardon for useless degrees
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I’m pretty sure all of the brackets came down, but even if that’s the case, most business owners (that are employing folks anyway) are in the higher brackets.
Individuals making $70ish are capped at 22% in 2018 and I’d bet have an effective rate of sub-15% for fed income tax. In 2017 their max rate was 25%. So, ya, you’re talking a smallish reduction in rates; however, you have to also take into consideration the changes in deduction (higher standard deduction now). This still might just be a small reduction in their tax bill, but, again, these aren’t the employers, generally.
I don’t remember. I thought there was talk about some significant shifts in deductions, but I don’t remember what the final bill said.
Some of them sure as a lot of capital projects employee people temporarily anyway, but if you invest a few million into an expansion or a new product line, for example, you’re going to need employees to work it, generally. So it’s new long-term employment. Now, I haven’t the faintest Idea how many of those types of jobs have been or will be created.
If that how the GOP sold it? As a means to afford automation?
I don’t think a lot of companies will invest heavily in automation for the same reason they won’t increase wages. At this point, generally, automation costs more than having a worker for a low skilled job, like a fork truck driver for example. Until the cost to automate/maintain is less than to employ, companies aren’t going to automate. It just doesn’t make sense even if they pay say 5%-15% less in taxes for the next couple of years. Eventually, sans the abolition of the corporate income tax, the rates are likely going to go up; although, the corporate rate doesn’t change that often. They’d basically be investing their way into higher overhead in the medium to long-term and most businesses don’t operate like that (successful ones anyway).
Yes, exactly. Is a 25-year-old barista with a degree in Greek Physiology under-employed…? Hard to say.
The lower ones didn’t come down in excess of inflation. Not that it really matters, as the lower tiers don’t pay taxes anyways, but if the goal was to increase demand by increasing the supply of money (lawl) it definitely wasn’t accomplished.
In high value real estate areas (FL, CA, TX, etc) we’re actually seeing a net increase in taxes due to the new deduction changes.
No it’s the opposite of how the GOP sold it. That’s why I find it so hilarious when the party of business doesn’t seem to understand how business works.
I think it does with our snowballing HC costs that employers don’t want to stomach.
Maybe if safe space administrator was a job path…
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You’re talking about something different now, though. I thought we were talking about lowering taxes to encourage employment / wage increases?
I will say any money “saved” through lower taxes will almost (like 99.99%) certainly end up spent. I.e. added to the economy. We just aren’t savers in this country. So, in that regard, I’d say the mission was accomplished. Isn’t that the end goal after all? More spending for gdp growth (terrible long-term model not withstanding).
I believe it.
Ya, maybe. That’s a good point.
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Apologies. I went tangent-y when we started talking about the individual bracket decreases
I disagree, given how the tax cuts are focused at the top and the people at the top have shown themselves to be more than capable of saving. Maybe more like 2/3rd spent Imo, but I have no way to quantify that
Yeah that aspect of the mission will definitely be accomplished, I just don’t necessarily think it’s a good thing.
I think it’s the housing market declining that’s spooking me. People are over leveraged like in 07 and have developed negative financial skills since then somehow
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Sure, I’m guesstimating, but a lot of folks at the top don’t really “save”. Not in the traditional sense. They invest, which has a similar effect as spending. The only people* that horde(save) nowadays are corporations like Apple.
*Have to note corps aren’t people in case a certain someone happens to read this…
Oh, I completely agree it’s not a good thing. Excessive spending and debt will be our downfall. I’m all but convinced of it.
We don’t like to learn when “easy” money is available. My personal non-scientifically backed opinion is that the availability of debt for the “middle class” is a major driver in wage stagnation and the growing wage gap.
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Love all that jazz.
Can’t imagine why your wife caused a rough morning. You sound like a very reasonable fella
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I’m Thor and my wife’s the Hulk (attitude only of course)
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Is there any truth to the perception that millennials don’t want to buy after seeing their parents get chewed up in 07? I keep hearing that they aren’t buying houses, just renting. So they don’t have a 30 year millstone around their neck. Supposedly the youngsters want to move and be mobile.
There is truth to that. Last year at the mortgage company I was working at it was a topic of constant discussion. Fortunately, it mostly applies to members of my generation below a certain income threshold.
Logically mortgages are still a great option if you’re family rooted, as most people still are, but my generation is seeing a pretty significant risk tolerance shift. People my age are taking out a lot more reasonable loan values.
Fwiw, I bought a house a year ago for 170k (which equates to 3b1.5ba ~1800 sqft and full basement), but I was pre approved for 320k, despite having no fuckin chance of affording it.
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Yeah they pre approved me for north of $400k when I was making a lot less than I am now. I still couldn’t afford a nearly $3k/month payment without eating beans and rice.
The realtor was like “but you’re approved for X! Don’t you want to look at bigger houses”
“No”
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You gotta love that. When my wife and I bought our most recent house we were pre-approved for something astronomically absurd. Like $900K or something. Maybe over a million I can’t even remember now it was so ridiculous. I was like, “well, I guess we won’t have to worry about paying this back since we’ll die of starvation before the first payment is due.”
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Ha, I’ll chime in on that too since we’re all sharing our funny housing / pre-approval stories.
My wife and I bought a house last year of fairly similar dimensions to what @pfury described (3BR, 2.5 bath, 2 car garage that accommodates ActivitiesGuy Home Gym, in a great school district) for 247K. We were approved for at least 1.5x that, even though I never considered a house above 250K. We COULD have afforded a little bit more (I am paying a little extra on the mortgage which has us on pace to pay off the 30-yr mortgage in about 20 years), but I’d just rather not lock us into being house-poor & have more money available down the line for vacations and stuff for our kids.
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