FedEx (NYSE:FDX) is the latest U.S. corporation to announce it will raise employee pay as a result of the GOP’s recently passed tax reform bill.
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On Friday, FedEx announced it would increase employee pay by a cumulative $200 million, about two-thirds of which will be allocated toward hourly workers, who will receive their 2018 annual pay increase six months earlier than scheduled. Salaried workers will also benefit by way of increases in performance-based incentive plans.
The courier company will also voluntarily donate $1.5 billion to its pension plan, which it called “one of the best funded retirement programs in the country.”
Aside from investing in its workforce, FedEx also committed to shelling out another $1.5 billion to expand its Indianapolis hub over the next seven years and to modernize its Memphis “SuperHub.”
Between increased compensation, bonuses and capital investments, FedEx plans to invest $3.2 billion in the U.S. over the coming years.
The Tax Cuts and Jobs Act aimed to spur corporate investment in the U.S. through a number of new policies, most notably reducing the corporate tax rate by 14 percentage points to 21%, from the previous 35%. FedEx said in a press release that it expects the tax reform legislation will not only accomplish that goal, but that it will also strengthen U.S. GDP growth.
FedEx CEO Fred Smith told FOX Business’ Stuart Varney on "Varney & Co." earlier this month that the provisions of the tax bill would allow the company to expand its already robust domestic investment, suggesting at the time that FedEx would “probably” also raise worker pay.
“The tax bill corrects something that’s been a real problem for American business for years, and that is the punitive tax code that we used to have that dissuaded investment,” he said, adding that investment is the only way to raise wages for blue collar workers.
A number of U.S. companies have already committed to increasing employee pay, including Boeing (NYSE:BA), Home Depot (NYSE:HD), AT&T (NYSE:T) and JPMorgan (NYSE:JPM), among others.
During the mid-morning hours of Friday’s session, shares of FedEx were trading slightly lower.