GIMME SOME SUGAR

So, there have been quite a few grand pronouncements in the days since the passage of the Republican tax overhaul, with a great many of those includin' the ever-positive word, "bonus."  Corporate giants from AT&T to Walmart have been blowin' their own horns through press releases and friendly media about their "sharin' of the wealth" with those at the bottom of the food chain.

(Note:  Both AT&T and Walmart, among other bonus-awardin' companies, followed their Corporate Charity proclamations with announcements of layoffs and closing, but with far less fanfare.  Look it up.)

Another corporation to announce bonuses was Hostess.  Yep, that Hostess.

Hostess unveiled their intentions to award around a thousand of its hourly employees a one-time $500 contribution to those employees' 401(k) accounts, as well as a one-time cash bonus of $750.  But that's not all:  Hostess has also announced that it will begin selectin' a "product of the week", which will be given to each employee in a "multi-pack."  (To date, I've been unable to find information as to whether a box of snacks will be considered "taxable compensation" awarded the Employee or a "charitable contribution" claimed by the Company.)

Anyway:  On its face, and in the form of a simple sentence, the Hostess thing seems not-too-bad.  The Company is gettin' a very generous tax break, in perpetuity, and have decided to spread a little bit around.  (Once.)  But it ain't like they had to.  They chose to.  

The reduction in the corporate tax rate didn't come with stipulations, with any form of a bindin' legal contract that would require corporations to create more jobs or increase compensation to its employees or even keep jobs in this country under penalty of  forfeiture of their right to operate under the starkly lower corporate tax rate.  Nope.  Nothin' like that in place.  (Although the generous corporate tax break has been constantly touted as somethin' that would absolutely do all these things, and more.). Out of the goodness of their hearts, (and possibly  as a really cheap public relations gimmick,) the Foks at the Top at Hostess chose to do this.

And seein' as how the numbers per company, per employee with the Hostess bonuses are a fairly typical example of what's been takin' place the past couple weeks, I thought theirs' would serve as a good opportunity to look more closely, see just what somethin' like this might actually mean in terms of genuine impact in the lives of the Regular Guy.  Or Gal.  (You know what I mean...)

So, gonna apply a little math here, as well as some real life analogies, and see how this shakes out. 

Since it’s a one-time thing, I chose to consider the Hostess bonuses in the context of what it would mean in real terms if spread over a single year, just to get a clearer understandin' of impact were it in the form of hourly compensation.  I realize it's a one time cash bonus.

$1250 divided by the 52 week’s in a year comes to $24 a week. Based on a 40 hour week, that comes to 60 cents an hour. Not too bad!

But, those employees won't be gettin' $24 extra a week on their paychecks, though. Forty percent of that $1250 goes directly into your 401K where, it may stand to actually make a little more money.
Even if it’s tax-deferred, you’ll still be payin’ taxes on that $500, and any money it might earn.
But it’s tied to the Stock Market with no guarantee that it’ll make any additional money or even still be there when Hostess folks choose to retire, and who knows when they’ll be able to do that, if at all? (You work at a cupcake factory, so I doubt you’re packin’ away cash by the bucketload for your retirement villa in Florida, anyway.)

So, not really gettin’ a 60 cents an hour raise for a year.

Keep hammerin'...

The cash bonus of $750, divided by the 52 week’s, comes to a little less than $14.50 a week.  Let’s just call it $14.50, anyway. Divide that $14.50 a week by the 40 hours per... that comes to almost exactly 36 cents per hour. A decent raise, I figure. But it ain’t a raise. It's tantamount to 36 cents an hour, but only for a year.  Consider taxes of about 25%, and the gracious gift bestowed upon Hostess' hard-workin' folks by Republicans and Hostess turns out to be somethin' closer to 27 cents per hour, for only one year.

So, 27 cents times 40 hours a week means that, for one year, you’ll have $10.80 additional money in your pocket per week, or $2.16 additional cash flow per day. should be able to get couple cups of cheap coffee a day with that.

But, they'll all get maybe somethin’ like one Twinkie or cupcake or Ding-Dong, or half of a delicious fruit pie with each cup of Tax Cut Bonus Java for free!
Even after a year and you have to go back to payin’ for your couple cups of coffee a day, you’re still gonna get some free snacks!

Boy!  This whole New Tax Plan thing is gonna absolutely bury us all in Untold Riches!

Fish~

Correction:  Looks like the free snacks thing will also go away after one year.  F~