With Republicans slashing the corporate tax rate, AT&T (T - Get Report) led a wave of companies announcing one-time employee bonuses and new plans to invest capital. Comcast (CMCSA - Get Report) , Boeing (BA - Get Report) , Wells Fargo (WFC - Get Report) and Fifth Third (FITB - Get Report) also announced plans to pay a bonus or invest in ways that the companies said would benefit workers.
On Wednesday, AT&T pledged to give more than 200,000 of its non-management workers a $1,000 bonus once the bill passes, as well as invest an extra $1 billion, due to the tax bill's benefits. However, a major AT&T union argued that workers at AT&T and other companies should get a payout of about four times that amount, based on data about the bill's benefits from the White House.
AT&T shares have gained 1.4% to $39.03 per since the start of the week, as momentum for the Republican tax plan mounted. The giant telecom has long been a vocal proponent of corporate tax cuts.
At an investor conference this summer, AT&T Chairman and CEO Randall Stephenson said it would be "a crying shame" and "an indictment on a lot of ... business leadership, as well as political leadership" if Congress could not rewrite the tax code by the end of the year.
And CFO John Stephens had pledged to boost investment if Washington could rework the tax code. During the telecom's third-quarter earnings call in October, CFO John Stephens said AT&T "already invests more in the United States than any other public company, but we're ready to invest even more if tax reform becomes law."
The telecom's bonus pool for its workers comes to $200 million, or a bit more than one-tenth of 1% of AT&T's projected $160 billion in 2018 sales. AT&T also said it would invest an extra $1 billion next year, which comes out to about 4.5% of the $22 billion in 2018 capex that Wall Street forecasts, according to FactSet.
The Communications Workers of America, which represents about 160,000 workers at AT&T and DirecTV, says the bonus arose out of discussions between union president Chris Shelton and AT&T's management. While the CWA supports the bonus, the union suggested that even Trump administration projections show that workers are due more.
The CWA points to analysis of the impact of the tax cuts on economic growth from the White House Council of Economic Advisers. "Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually" by year four of the cuts, the Council wrote in an October report. The new tax plan would cut the rate to 21%, not the originally expected 20%.
"CWA's president is glad that working people at AT&T will get this first payment," CWA spokesperson Candice Johnson said. "That's not all that the tax bill has promised working people; $4,000 a year annually is what the Republican leaders were using to sell this bill." The union says it also reached out to Verizon (VZ - Get Report) , General Electric (GE - Get Report) , American Airlines (AAL - Get Report) , Disney's (DIS - Get Report) ABC and other companies about the projected $4,000 gains for workers.
AT&T declined to comment for this story.
Other companies have also promised to pay bonuses or increase their investments because of the tax plan.
Boeing pledged to $300 million in charity, worker training and improvements to its facilities and infrastructure, while Comcast said it will pay $1,000 bonuses for more than 100,000 workers and also pledged to invest $50 billion over the next five years. The company is on track for nearly $10 billion in capital expenditures this year.
In the banking sector, Wells Fargo said it will increase its minimum pay by 11%, from $13.50 to $15 per hour, and also donate $400 million to "community and non profit organizations." Rival Fifth Third Bancorp also said it will raise its minimum wage to $15 an hour, and pledged a $1,000 bonus for more than 13,500 staffers.
The companies announcing bonuses are from industries that are either highly regulated, such as telecom and banking, or work closely with the government, such as defense. For its part, AT&T is battling the U.S. Department of Justice over its planned purchase of Time Warner Inc. (TWX) . But Evercore ISI Managing Director and Head of Political Analysis Terry Haines suggested that none of the companies announcing special bonuses and wage increases would win special favors from the government.
"Actions like this are taken at the senior executive/corporate board level, and so the overwhelming reason they're done is for business reasons. They're not done lightly or frivolously," Haines said. "Some companies might hope for increased goodwill or political capital, but it won't change how mergers are evaluated or how financials are regulated."
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