After tax profits UP. Wage growth FLAT.

The new tax bill helps corporate profits.  It doesn't help wages.  Reminder: workers are not owners.  They are an expense.

Democrats have a good message if they will claim it: they are fighting for higher wages for workers.

Small Trickle

Trump and the GOP lost all budget integrity.  Having fought infrastructure spending at the bottom of the recession in 2009 when there was idle construction capacity everywhere, now, at the top of a business cycle, Trump and the GOP cut taxes, add spending, and say the deficit doesn't matter.  

It is a sugar high.

Businesses and the stock markets are busy evaluating and digesting the new environment of this.  Meanwhile, Trump is out selling an idea, that the lower tax rate on corporations will mean they will be flush with profits and they will share them with employees.

That is not how it works.

Stockholders are investors, people with savings--capital--they want to put to work. Some of these stockholders are very wealthy individuals, some are pools of money invested on behalf of pension funds for workers, and some are people people of modest means--though this last group doesn't amount to very much. Poor and middle income people are busy paying rent, utilities, and food.

Wages about flat under Trump

Simply put, poor and working people don't own meaningful amounts of corporate stock.  They are paid for what they do, not for what they own.

It is a fantasy to think that every working person is simultaneously a worker and an owner, in some glorious harmony of pension fund socialism, joining the proletariate and the bourgeois classes, because the worker's pension fund account owns so much stock.  Except in the unusual cases where public employees have large pensions funded by pools of PERS investments, or those happy and rare situations where employees get stock or stock options that explode upward in value, working and middle class people are not owners. Most middle class people in America retire with their Social Security, sometimes home equity, and little else.

I have first hand knowledge here.  I was a Financial Advisor for 30 years.

The benefit of the tax cuts go to stockholders, not workers.

The tax cut reduces an expense for the company.  Lower expenses mean more for stockholders. They take the capital risk.  They get the losses and they get the profits. Workers, too, are an expense of the company.  The goal of the stockholders and their managers are to keep expenses down. 

Little trickle down to workers.

Employees get paid as part of a labor market.  With exceptions for family members or other rare situations where the owner is keeping unproductive people on the books for non-monetary reasons, employees don't get paid out of charity or good will. They get paid because they bring value in excess of their costs. They get paid what the employer needs to pay them to keep them working and productive and happy enough that the best ones don't quit to work elsewhere.

There were announcements of bonus-giving following passage of the tax bill by a few businesses, but this was public relations and political gesturing by the owners.  It was a Christmas bonus, an act of "generosity" to curry favor with Trump and to retain workers.  It was show business, but it doesn't change the reality that wages are established by labor markets, and the profits belong to the owner.

Democratic messaging should focus on their efforts to raise wages. Nancy Pelosi has been quoted calling what workers get as "crumbs".  The problem with this approach is that the crumbs are visible to workers, and crumbs are better than nothing. The early data--and the simple fact of how businesses are organized--suggest a better message would be to call for higher wages. Be on the side of workers getting paid better. If in fact wages go up Democrats can take credit for the pressure they are mounting. If they do not, Democrats can cast blame.

In any case, it is better to be calling for something really good than be minimizing something that people can see and that they like.


Trump was elected because of the wave of working people convinced he was on their side on a variety of issues.  

His tax bill helped the very people many Trump voters were angry with, wealthy Wall Street people.  Not them. Corporate profits do not trickle down very far.  

Democrats have a story to tell.