- The billionaire investor Paul Tudor Jones cofounded the nonprofit Just Capital in 2013 to measure what Americans want from corporations and which of these companies are contributing to a “more just” society.
- President Donald Trump’s tax plan is set to save the 1,000 largest American companies $US150 billion.
- Just Capital has analysed 120 of these companies, whose savings account for about one-third of the total, and found that only about 6% of the windfall was going toward wages that weren’t one-time bonuses.
- Just Capital has, however, highlighted 15 companies that are using the opportunity to invest in their employees and communities. They include Boeing,FedEx,JPMorgan Chase, and Apple.
- This post is part of Business Insider’s ongoing series on Better Capitalism.
After Congress passed Republicans’ tax plan in December, President Donald Trump said it was “above all else a jobs bill” that would create new American jobs and raise wages across the US.
The corporate tax rate was reduced to 21% from 35% as part of the law, with businesses expected to save an estimated $US1 trillion over the next decade.
And while the cut has created jobs and boosted wages at some American companies, the investor Paul Tudor Jones’ nonprofit Just Capital found that only about 20% of the windfall was going toward job creation and 6% was going toward workers. A full 57% was going to shareholders in the form of stock buybacks, dividends, or retained earnings.
Just Capital told Business Insider that while the overall picture could look disheartening, there were companies like Boeing and JPMorgan Chase that were using their tax savings to create long-term value rather than only to boost their stock price.
Throughout the year, Just Capital has been tracking how companies in the Russell 1000 spend their tax savings. It measures that spending across seven categories. Using a 2017 survey of 4,100 Americans, Just found that Americans rank, in order from most to least importance, a company’s behaviour regarding workers, customers, products, environment, communities, jobs, and management and shareholders.
Just has created a ranking of the companies that have reported their spending, where each of the seven categories is weighted for its perceived importance (i.e., savings spent on workers is weighed more heavily than the same percentage of savings spent on communities).
Just’s research director, Rob Du Boff, explained to us: “The percentages are based on our estimate of potential tax savings (based largely on what they were paying in the prior three years) and our estimate of the incremental spending programs (for this reason, accelerated pension plan contributions don’t count because that is just a payment toward a pre-existing liability). There is certainly some guesswork, but we already have a rich set of data from our prior wage and tax work to make educated guesses.”
The ranking is ordered by quartile, and we’ve highlighted the 15 companies that are in the top half of the top quartile. Because of the many variables at play, these 15 companies are not rated one through 15 but rather “should be considered equals,” Du Boff said.
As of this writing, Just Capital has analysed 121 of the Russell 1000 companies, but they account for about one-third of the index’s value. You can find the full rankings, updated weekly, as well as the full methodology, at Just’s website.
Boeing — Aircraft company based in Chicago
• $US220.7 million in tax savings
• 67% to workers, 52% to jobs
Boeing CEO Dennis Muilenburg said in a press release that his company would be using the savings to invest in “training, education, and other capabilities development to meet the scale needed for rapidly evolving technologies and expanding markets” as well as in “‘workplace of the future’ facilities and infrastructure enhancements.”
FedEx — Courier company based in Memphis, Tennessee
• $US385.7 million in tax savings
• 48% to workers, 52% to jobs
FedEx is putting all of its savings toward an investment in workers and jobs, including $US200 in increased compensation and a contribution to the $US1.5 billion seven-year plan for building out its Indianapolis hub.
JPMorgan Chase — Financial-services company based in New York City
• $US2.9 billion in savings
• 3% to workers, 88% to products, 3% to communities, 6% to jobs
JPMorgan Chase has an ambitious $US20 billion five-year plan that was sparked by the tax cut. This includes increasing wages for 22,000 employees working at Chase branches and hiring 4,000 Americans. And of that $US20 billion, $US1.75 billion will be invested in philanthropic causes in communities like the South Bronx and Detroit.
Kraft Heinz — Food company based in Chicago and Pittsburgh
• $US463.7 million in tax savings
• 27% to products, 73% to jobs
Kraft Heinz CFO David Knopf said in a statement that his company would be investing heavily in its workforce with its windfall, with “$US300 million in strategic investments to build our capabilities, our people skills and our brands” and “more than $US800 million in capital expenditures to improve quality, safety and capacity.”
Apple — Technology company based in Cupertino, California
• $US5.6 billion in tax savings
• 100% to jobs
Apple, as the country’s biggest taxpayer, has a $US30 billion plan over the next five years that the company estimates will create 20,000 American jobs.
Regions Financial — Financial-services company based in Birmingham, Alabama
• $US174.7 million in tax savings
• 14% to workers, 23% to communities, 57% to jobs, 6% to shareholders
“The investments we are announcing today in our workforce, our communities and our company reflect our commitment to creating shared value and will support sustainable growth that ultimately benefits our customers and shareholders,” Regions CEO Grayson Hall said in a statement. This includes raising its minimum wage to $US15 an hour and increasing its infrastructure investment by $US100 million.
Huntington Ingalls Industries Inc. — Shipbuilding company based in Newport News, Virginia
• $US71.9 million in tax savings
• 7% to workers, 83% to jobs, 10% to shareholders
Huntington Ingalls Industries CEO Mike Petters told the South Mississippi Sun Herald that it was giving all of its 11,500 workers, with few exceptions, a one-time $US500 bonus and was also spending about $US100 million on workforce development at its apprenticeship schools.
Bank of New York Mellon — Financial-services company based in New York City
• $US309.6 million in tax savings
• 1% to workers, 80% to customers, 19% to shareholders
BNY Mellon told The Wall Street Journal that it would be raising its minimum wage for operations workers to $US15 an hour and would be investing the majority of its tax savings into technology upgrades designed to enhance the customer experience.
Darden Restaurants — Restaurant company based in Orlando, Florida
• $US25.3 million in tax savings
• 79% to workers, 21% to shareholders
Darden, the owner of restaurant chains like Olive Garden and Red Lobster, was the first restaurant company to announce it would be investing the majority of its savings in its workforce.
Chipotle Mexican Grill — Restaurant company based in Denver
• $US45 million in tax savings
• 13% to workers, 65% to customers, 22% to shareholders
Chipotle is giving its employees one-time bonuses but will be putting most of its savings toward a $US50 million plan to enhance its restaurants in the wake of a string of food-contamination scandals. “This initiative is about refreshing things in our restaurants aesthetically to make them more inviting and efficient for guests,” a company spokesman told CNN Money.
Amerco — Holding company based in Reno, Nevada
• $US60 million in tax savings
• 10% to workers, 67% to products, 24% to shareholders
Amerco is the holding company for U-Haul, and U-Haul’s chairman, Joe Shoen, said in a statement that full-time employees would be getting a $US1,200 bonus, part-time employees would be getting a $US500 bonus, and all employees would be getting a wage increase.
Carter’s — Apparel company based in Atlanta
• $US40 million in tax savings
• 13% to workers, 50% to customers, 38% to shareholders
Carter’s is investing in products across its children’s clothing lines and is contributing $US20 million to one-time bonuses and retirement plans.
Associated Banc-Corp — Bank holding company based in Green Bay, Wisconsin
• $US29.3 million in tax savings
• 44% to workers, 12% to communities, 44% to shareholders
Associated Bank is raising its minimum wage to $US15 an hour from $US10 and is giving a one-time $US500 bonus to most employees. It is also contributing $US3.5 million in charitable investments in low- to moderate-income communities.
Idexx Laboratories — Animal healthcare services company based in Westbrook, Maine
• $US35.4 million in tax savings
• 38% to workers, 14% to jobs, 50% to shareholders
Idexx CEO Jonathan Ayers wrote in a statement that the company was taking advantage of its tax savings to raise its 401(k) match and invest in innovation intended to create jobs.
Humana — Health-insurance company based in Louisville, Kentucky
• $US550 million in tax savings
• 25% to workers, 12% to customers, 13% to communities, 50% to shareholders
The Courier-Journal reported that Humana is raising its minimum wage to $US15 an hour and is implementing an incentive-based program that can raise an employee’s wage by as much as 4%.