Nearly One-Third of Employers Plan to Use Tax Breaks on Employee Compensation, Benefits
Of this group, 25% said they will increase their company match to the 401(k) plan.
Following the passage of the Tax Cuts and Jobs Act, Aon conducted a survey of 504 mid-sized to large employers to find out how they plan to use the additional capital, as well as a survey of 2,079 employees to learn how they would like to see that money allocated.
The employer survey showed that 29% of employers plan to use the funds for employee compensation and benefits. Another 26% plan to spend the money on capital structure, 24% on infrastructure and 23% as a direct return to shareholders.
The survey also indicated that companies plan to use the windfall primarily in a broad-based way, though in some cases for a specific gap: 55% said they would use the money in a broad-based way, 15% to address pay gaps, 21% for specific job families, and 33% for other uses.
As to the timeframe for when they plan to announce these changes, 14% have already announced their changes, 26% plan to announce changes this year, and 60% are still determining their plans or are not planning to make any changes.
Of the group that said they have made or are considering making changes to compensation and benefits, 26% said they are increasing workers’ base pay, 25% said they are contributing more to their 401(k) plan, 22% said they are giving workers a one-time cash payout, 15% said they are making improvements to employee training, and 14% said they are increasing bonus targets.
If employees were to get a pay increase or a one-time cash payout, 51% said they would save it, 30% would use the money to pay down credit card bills, and 7% would spend it. Sixty-nine percent of employees said they would prefer to receive 1% more in their 401(k) rather than 2% in profit sharing. Should their employer make changes to their health care insurance, 50% of employees would like lower monthly premiums.