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Small businesses planning to raise wages in 2018 at highest rate in 28 years
Hmm. What could have happened?
Chuck Schumer and Nancy Pelosi have been insisting that $1,000 bonuses to workers are chump change, an degrading insult that should make the workers seethe with rage. I have a feeling that's not what most of them were doing as they strolled into the bank to cash or deposit those unexpected checks. But if Chuck and Nancy don't like $1,000 bonuses, maybe they'd feel better about rising wages at small businesses.
Because according to the National Federation of Independent Businesses, we're going to get more of that this year than we've seen in the past 28 years:
The percentage of U.S. small businesses planning to raise wages is the highest in more than 28 years. That’s according to the January employment survey of the National Federation of Independent Business, due out later today. Small companies posted solid job increases last month amounting to 0.23 workers per firm. And they would have hired even more workers if they had been able to find them.
NFIB CEO Juanita Duggan says that for owners of small companies, “finding qualified workers is an increasing challenge, rising to the top of their concerns.”
To address the tight labor market for both skilled and unskilled workers, a net 24% of owners surveyed “plan to raise worker compensation, the highest reading since December 1989,” says NFIB Chief Economist William Dunkelberg. He adds that a full 31% “reported raising compensation to attract or retain employees,” the highest reading on that question since December 2000. “Only an increase in the labor force and an increase in the participation rate can provide relief from the impact of labor shortages,” adds Mr. Dunkelberg.
It's particularly important that the wage increases are coming from small businesses. We told you on Thursday that the economy created 234,000 new jobs in January, and that most of them came from bigger businesses. That's not surprising, since bigger businesses tend to have more cash on hand and can react more quickly to a new dynamic like tax reform. The fact the smaller businesses are raising wages says that they know they need to attract more workers, and they believe tax reform provides them with access to enough capital that they can now compete more seriously for these workers.
Much of the reason for this lies in the the additional 20 percent exemption tax reform provided to owners of pass-through businesses - those who pay taxes on corporate earnings at the individual rate. That 20 percent exemption puts them on a more even-footing with larger corporations, which means that contrary to what many people are trying to tell you, the tax cut was designed to benefit businesses of all sizes, and people at all income levels.
When businesses are able to increase wages to attract more workers because their own tax bill has been cut, that tells you that an individual's benefit from tax reform doesn't end with the reduction in his or her own personal tax rate. It also provides greater opportunity for more earning and advancement, because the prospective employers that previously couldn't afford to fairly compensate those folks now can.
I see there are now polls showing that the number of people who approve of the tax cut has pulled even with the number who disapprove. Is it any wonder why? When disapproval was high, it was because people were going on negative media coverage of the tax cut. They assumed the plan was as the media were presenting it to them, and it sounded to them like only the rich and big corporations would benefit, and they wouldn't. So they disapproved, of course.
Now more and more people are finding out that they will personally benefit from a tax cut they were told was going to screw them, and they realize they were lied to. Funny how a little extra money in your pocket, and more opportunity coming your way, can change your attitude, isn't it?
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