Signed into law on December 22, 2017, the Tax Cuts and Jobs Act legislation represents the biggest overhaul of the United States tax code in 30 years. While it will be some time before we know the full impact of the reduction in corporate and personal tax rates on the job market, we have a few short-term predictions for the year ahead.
the purse strings will loosen
While the change mostly applies to (and benefits) large companies, most economists expect the new law to help speed overall economic growth and make U.S. businesses more globally competitive. It’s also expected to result in increased capital expenditures by large companies, with investments in new equipment, real estate, technology — and people. Since the new law was signed, dozens of companies have announced wage or salary increases, bonuses or other financial incentives for their workforces. While bonuses are one short-term response to the tax bill, other companies have opted instead to invest in more training for their workforce — a sure-fire way to improve engagement and retention.
hiring just got harder
It will get even harder to find skilled workers and professionals. In fact, increased hiring will further exacerbate an already tight labor market, making it even more difficult to find available and skilled workers. Economists believe the overall unemployment rate could drop to just 3.5 percent by the end of this year.
benefits will be evaluated
The limit on tax deductions that businesses can claim for certain employee benefits and perks is changing. These include things like parking/transit or biking benefits and meals or on-site gyms, as well as tuition reduction or education assistance. We expect this change will cause some employers to revisit their offerings. But in a time where competition is at an all-time high, these will be tough decisions to make, since a comprehensive and flexible benefits package is an essential tool in recruiting and retaining talented employees. Employers should review their offerings carefully to see if the decrease in the corporate tax rate offsets any loss of the deduction.
Today’s business landscape is changing rapidly, and there’s never been a better time to partner with a staffing agency. Randstad can help you review your compensation offerings and ensure your pay rates are competitive. You can also download one of our salary guides now to start your research. Our local teams speak with hundreds of candidates every week, so we have a solid understanding of what matters most to the talent in your industry. Your Randstad consultant will uncover your differentiators in the marketplace and champion your brand to potential candidates.