If people listened exclusively to the cheerleading of Republicans who supported the unpopular tax bill, they would be left with the impression the bill created a cascade of extravagant bonuses and ushered in an era of never-ending job growth.
Yet Macy’s just announced that it is closing five California stores and laying off 5,000 workers nationwide.
Unfortunately, members of Congress do their constituents a disservice by cherry-picking only positive news and pretending there is no bad news at all.
Despite multiple posts on social media about some stores hiring or giving bonuses, Reps. Steve Knight (R-Palmdale) and Mimi Walters (R-Irvine), both of whom voted for the tax bill over the objections of constituents, would like to pretend the following headlines never happened:
- Kimberly-Clark — the maker of Kleenex, Huggies, and many other popular brands — is closing or selling 10 facilities and shedding about 12 percent of its workforce.
- Walmart is closing 63 stores (including two in California), impacting 9,400 employees.
- Carrier engaged in another round of layoffs, impacting more than 200 workers.
Kimberly-Clark specifically referenced the tax bill in a conference call with reporters, noting that its corporate savings will be used to finance the 5,500 layoffs and the closing of 10 plants.
Additionally, both Knight and Walters have heaped praise on Disney, which announced it will give one-time bonuses and set up an education fund totaling $175 million in spending.
While no one would begrudge bonuses from wealthy corporations to employees, economists at the Institute of Taxation and Economic Policy (ITEP) urge caution rather than exuberance.
ITEP notes that Disney will save an estimated $1.2 billion in 2018 alone. That means that Disney is spending roughly 15 percent of their savings on employees, while pocketing the remaining 85 percent. And who knows what will happen in 2019 and beyond.
It is true that a one-time bonus provides some benefit for employees, but it doesn’t immediately follow that Disney and other corporations’ recent action will result in a sustained, resolute corporate effort to permanently increase rank and file workers’ wages in a meaningful way. Most economists agree it will take years before we can measure whether these supply-side tax cuts have had their promised effect. If history is any indication, the wealth will not trickle down. Notably, neither Disney nor other companies that have distributed bonuses has said anything about repeating their bonus largess in years to come.
Knight and Walters are taking advantage of splashy press releases promising temporary benefits to workers, while ignoring the fact that corporate shareholders will pocket the overwhelming portion of any benefits, especially in the years to come.
In fact, economists warned that the tax bill would have a negative impact on California’s economy.
Hyped press releases and one-time bonuses don’t equal long-term sustainable growth shared by all Californians.
And ignoring layoffs that hurt Californians in order to stay on-message about a tax bill people didn’t want in the first place doesn’t lessen the economic hardship faced by many Californians.
Knight and Walters should be honest with their constituents, instead of cheerily spinning half-truths.