Beige Book Excerpt: Modest Compensation Increases On Tax Cuts>

     WASHINGTON (MNI) - The following are compiled excerpts from the 

Federal Reserve's report on Current Economic Conditions, known as 

The Beige Book, released Wednesday: 

National Summary

     "Contacts in a few Districts conveyed reports of modest increases 

in compensation following passage of the Tax Cuts and Jobs Act." 

Cleveland

     "Some firms reported that the Tax Cut and Jobs Act is enabling them 

to increase investment and raise worker pay."

     "The tough competition for workers led employers to raise wages 

during the survey period, especially for lower-wage jobs. Contacts 

speculated that savings resulting from the Tax Cuts and Jobs Act (TCJA) 

will, in part, support pay increases over the short to medium terms.A 

few bankers expect to raise minimum pay to $15 per hour within the next 

year or two.However, few contacts expect the tax cuts to lead to more 

robust hiring. Rather, firms expect to maintain their recent hiring pace 

over the short term." 

Boston 

     "One large retailer planned to pass along half its savings from the 

corporate tax cut to selected workers in the form of higher wages, while 

a smaller retailer said it planned to raise salaries a bit to match the 

wage increases announced by some prominent retail chains as a result of 

the tax cuts.  "

     (Retail and Tourism) "One contact said that the cut in federal 

income taxes and actual or expected wage gains augur well for the retail 

sector." 

     (Manufacturing) "Contacts said that it was too soon to determine 

the effect of the new tax code on capital spending." 

     "Respondents across the First District voiced concerns that 

commercial property values could fall in response to rising yields on 

long-term Treasuries, and cited both upside and downside risks related 

to recent changes in federal tax laws and the recently signed federal 

budget." 

Minneapolis

     "Wage pressures were moderate since the last report. A number of 

one-time bonuses were reported, stemming from recent changes in federal 

tax policy. Several contacts, including a Montana banker, also said 

raises were more likely because tax reform provides a way to pay for 

increased wages without increasing prices or reducing profits. A 

Minnesota construction contractor said wages are going up because we 

are seeing an increase in productivity. A Montana ski resort contact 

said that tax savings would allow the company to raise wages, and a 

Montana construction contact believed tax changes would provide a 

sizable, single-step increase in wages. However, a number of public 

union contracts covering South Dakota county employees, Minnesota and 

Wisconsin state employees, and higher education service workers in 

Minnesotaall settled for increases of 2 percent or less." 

Dallas 

     (Manufacturing) "Outlooks overall remained highly positive, with 

contacts citing tax reform and a lower dollar as tailwinds, and rising 

interest rates and inflation as potential headwinds." 

--MNI Washington Bureau;tel: +1 202 371-2121

[TOPICS: MMUFE$,M$U$$$]