A number of companies including Comcast-NBC Universal, AT&T, and Fifth Third Bancorp have announced they will pay employees a bonus after the Republican tax bill becomes law.
Once President Donald Trump signs the Tax Cuts and Jobs Act, which has passed both houses of Congress, it will reduce the corporate tax rate from 35% to 21%. Anticipating the windfall, Fifth Third said Wednesday it would raise its minimum hourly wage for nearly 3,000 employees to $15 and distribute a one-time bonus of $1,000 to more than 13,500 employees.
Approximately 75% of Fifth Third employees will receive a pay increase or bonus, with the bonus being distributed by the end of the year, assuming Trump signs the bill before Christmas.
“We want to invest in our most important asset – our people,” Fifth Third CEO Greg Carmichael said in a news release. “Our employees drive our reputation, our business and our success.”
Among other companies taking similar steps, AT&T is planning to award a $1,000 bonus to 200,000 U.S. employees, Comcast will pay a $1,000 bonus to more than 100,000 employees, and Wells Fargo said it would boost its minimum wage to $15 an hour.
Cincinnati-based Fifth Third, the 15th-largest U.S. bank by asset size, said the tax cut allowed it to re-evaluate its compensation structure and pass along some of the windfall. Senior managers and executive leadership are excluded from the bonus.
According to the Cincinnati Business Courier, the corporate tax cut will benefit Fifth Third more than many other companies because it does almost all of its business in the U.S. “Foreign profits are exempt from U.S. taxes, so companies with overseas operations tend to pay a lower real tax rate,” the publication said.
The bank will spend about $23.6 million on the raises and bonuses during the first year, a spokeswoman said, with the bonuses incurring a one-time cost of $13.6 million and the raises costing about another $10 million in 2018.