On Dec. 22, 2017, the U.S. Congress passed into law the Tax Cuts and Jobs Act of 2017 (TCJA). This bill aims to simplify tax codes for individuals and create incentives for businesses to employ American workers through tax breaks – But will it deliver its purpose?
The National Association of Manufacturers (NAM) sends out a quarterly survey to 14,000 CEOs of small to large manufacturing companies, and in their most recent survey, manufacturers are optimistic that the Tax Cuts will boost the economy and will lead to increase in hiring.
– 63% of the respondents said the tax reform would encourage their companies to spend more on their facilities and equipment.
– 58% said they would expand their businesses.
– 54% percent said they would hire more workers
– 49% planned to increase wages and benefits.
NAM President Jay Timmons estimates that manufacturing jobs will grow from today’s 350,000 to 2 million jobs by 2025 as a result of the Tax Cuts.
At the beginning of 2018, companies that have announced increase in hiring, as well as workers’ salaries, include industry giants like Apple, Starbucks and Whirlpool.
Other experts say that Tax Cuts might result to manufacturers accelerating towards the direction of automation. Finance Professionals from Columbia Threadneedle Investments and Hodges Capital predict that companies will use the Tax Cuts as means of buying back shares and investing towards automated equipment that will downsize their workforce.
“We would see a variety of investments get made that CEOs and CFOs have been holding back on,” Matt Litfin, a portfolio manager at Columbia Threadneedle Investments, told FOX Business. “One of the higher… quicker payback investments that companies have been looking at are in automation.”
Though it’s still early to make a determination on what this Tax Break will result to, manufacturing employment outlook remains to be high at the end of 2017. In their December report, The Bureau of Labor Statistics (BLS) reported that manufacturing has added 196,000 jobs to the economy – A 1.6% growth from 2016.
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