Reality Check: Your Paycheck & GOP Tax Cuts
MINNEAPOLIS (WCCO) -- This week marks seven months since President Donald Trump and Republicans passed historic tax cuts.
The economy remains strong, but new data shows a promise remains unkept: Companies are not raising worker pay.
When President Trump signed the $1 trillion tax bill, he said businesses would use their windfall corporate tax cut from 35 percent to 21 percent to invest in their businesses and boost wages.
"I consider this very much a bill for the middle class and a bill for jobs," said Trump last December.
Now, it is true. Take-home pay for many went up because the government took less out of your paycheck.
A single worker making $50,000 got $55 more per check, or $1,440 more a year.
A married couple at $75,000 saw $61 more every two weeks, $1.590 more a year.
But higher wages? Not so much.
Some companies gave one-time bonuses, but only a small percentage gave pay hikes, which grow over time.
Instead, many businesses used the tax windfall to buy back stock and return record amounts of cash to shareholders to the tune of $700 billion.
When the president took office, real wages were going up and kept improving. Now, new data show wages actually fell in the first six months since the tax cuts. That is because rising prices and inflation ate up very modest worker pay gains.
In Minnesota, wage growth is steady, but nowhere near what it was in 2017. Since January, wages grew at a fraction of what they did last year.
According to the Minnesota Department of Employment and Economic Development\, Minnesota saw an average hourly wage increase of 1.9 percent in the second quarter of 2018. In the first quarter of 2018, Minnesota saw an average hourly wage increase of 2.6 percent.
So, wages still increased in Minnesota in the second quarter, just not as quickly as they did in the first quarter.
Conversely, in the second quarter of 2017, Minnesota saw an average hourly wage increase of 5.6 percent, more than the 1.9 percent in the second quarter of this year.
"The economy is indeed doing well," said Trump last month.
It is true the stock market is high and unemployment is low, and tax cuts can take years to have an impact -- but workers have yet to see wage hikes they were promised.
The individual tax cuts for middle class taxpayers are temporary. They expire in 2025 unless Congress extends them.
Here are some of the sources used for Reality Check:
- President Trump Remarks On 6-Month Anniversary of Tax Cuts | More
- Federal Reserve Bank Of Minneapolis
- MN DEED: High Wages, High Demand
- Bloomberg: Five Charts That Show Where Corporate Savings Went
- Bureau of Labor Statistics Midwest Snapshot
- Vox: Tax Cuts Boost Wages? | YouTube
- CBS News: Worker Wages Drop
- CBS: How Much Will The Tax Cut Raise Your Take Home Pay?
- FOX Business: These Companies Are Hiking Pay, Issuing Bonuses
- CNBC: Now We Know How Business Are Spending Their Tax Windfall
- New York Times: Pay Raises and Bonuses
- Bloomberg Opinion: Trump Tax Cuts Haven't Done Anything For Workers
