tax cuts and jobs actThe TCJA or Tax Cut Jobs Act of 2017 is in full swing as companies try to first understand its short term and long term implications on their operations and then apply the advantages to their businesses. The Institute for Supply Chain Management (ISCM) conducted a survey of manufacturing and non-manufacturing companies to assess how much executives understood about the TCJA and how they envision its affects on their companies.

There’s a lot of information in the report and much of it is positive in terms of executives’ opinions but one area that seems counter intuitive to what is happening in the rest of the US economy is how supply chain companies are dealing with job growth.

Tight job market

The US Labor Department shows average hourly earnings up by 2.5 percent in December over last year and hiring has picked up fast in construction and mining leading to an unemployment rate of 4.1 percent - a 17 year low. But even with hiring on the rise incomes are reported to be slowly picking up. All these factors would indicate a tighter market for jobs along the supply chain where demand for better, faster performance means more employees focused on logistics details.

But employers competing for staff to fill picking, packing, and shipping are offering perks rather than increased pay. Some are offering on-site child care or direct reimbursements for that expense. Others are offering game-oriented perks like raffles for tech items (TVs, phones, etc.) or bringing in food services for special lunch events. Those niceties may be interesting but don’t always make a meaningful contribution to workers’ paychecks.

Survey commentary

The ISCM survey collected comments from its respondents and they represented a wide range of outlooks with the vast majority expressing positive projections about how the tax changes will benefit the company and its profitability. The TCJA is widely viewed among supply chain executives as a positive move that will create better profitibility for their own companies and for some of their employees.

However 48 percent don’t expect to see any increases in salary and merit increase budgets. Unfortunately nearly the same number of respondents (47 percent) see either no change or a decrease in spending for employee training and development budgets.

Supply chain companies, particularly logistics oriented enterprises need to rethink their strategies for long term growth and employee retention and make certain the J in TCJA is being treated with the level of importance it was enacted with.

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