FedEx Invests Entire 2017 Profit Back Into Workers

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A truck exits the FedEx Corp. shipping center in Chicago, Illinois, U.S., on Monday, Nov. 27, 2017. The holiday shopping season is off to a strong start and retailers appear to be continuing the momentum today -- Cyber Monday -- the biggest online spending day of the year. Photographer: Christopher Dilts/Bloomberg via Getty Images

How this for ‘crumbs,’ Speaker Pelosi?

FedEx is joining an increasingly lengthy list of companies using their savings from President Trump’s Tax Cuts and Jobs Act to reinvest in their employees. Anti-tax activist Grover Norquist is keeping a tally, which currently includes over 200 businesses.

Among the 200 are many small and mid-sized companies, announcing benefits including bonuses, higher raises, or better benefits. Most of them are in the following industries: banking, utilities, airlines, telecom, and broadcasting. This makes sense, given that those industries have among the highest average effective corporate tax rates (and thus benefit the most from the corporate tax rate reduction to 21 percent).

FedEx has had a massive corporate tax rate in the past – paying 35.3 percent in 2012, 35.9 percent in 2011, and 37.5 percent in 2010.

And with their tax savings cut down to 21 percent, they’ll be doing the following, according to a company press release today:

1) Over $200 million in increased compensation, about two-thirds of which will go to hourly team members by advancing 2018 annual pay increases by six months to April 1st from the normal October date. The remainder will fund increases in performance-based incentive plans for salaried personnel.

2) A voluntary contribution of $1.5 billion to the FedEx pension plan to ensure it remains one of the best funded retirement programs in the country.

3) Investing $1.5 billion to significantly expand the FedEx Express Indianapolis hub over the next seven years. The Memphis SuperHub will also be modernized and enlarged in a major program the details of which will be announced later this spring.

In all, this is a $3.2 billion commitment. For some perspective, the entire company earned $3 billion in 2017.

I suspect that many companies are overstating their “new” planned investment in response to tax reform by lumping together previously planned investment in with newly planned investment. For instance, if a company is already planning on investing $1 billion next year, and wants to invest an extra $500 million next year, it would be accurate to say they invested $500 million because of tax reform, not $1.5 billion.

I say that only in the case of FedEx because their new planned investment far exceeds their tax savings in their specific case.

Regardless, there’s absolutely nothing to complain about here, for shareholders or workers.

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By Matt

Matt is the co-founder of Unbiased America and a freelance writer specializing in economics and politics. He’s been published... More about Matt

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