United States Steel recently announced what it’s calling “temporary layoffs” in Michigan despite reaping a significant windfall from the Trump tax cuts.
According to Business Insider, U.S. Steel is laying off 200 workers at its Great Lakes Works facility in Ecorse, Michigan over the next several weeks. While the company calls them “temporary layoffs,” the company said more layoffs may come “periodically thereafter based on market conditions” after the first round of layoffs and didn’t give a time frame for when those workers may be hired back at the same production levels.
U.S. Steel spokeswoman Meghan Cox attributed the layoffs to “ongoing challenging market conditions,” which suggests President Trump’s ongoing trade war with China may be the key factor in the company’s decision to lay off workers.
The steel workers in Michigan losing their jobs is just the latest example of the Trump tax cuts — which were passed with the help of a majority-Republican Congress in late 2017 — having the opposite effect. While Trump sold the tax cut package to the public by promising it would encourage companies to invest in growing their workforces, the consensus among economists and business publications is that the tax cuts have had little benefit to anyone but the rich.
According to U.S. Steel financial reports compiled by MacroTrends, the company’s after-tax income at the end of 2017 was $387 million. But by the end of 2018 (the first year Trump’s tax cuts were in effect), the company saw its after-tax income increase to $1.15 billion — an increase of $728 million. According to the company’s own public statements, it invested that savings not in its workforce, but in buying back $300 million in shares of its own stock in late 2018.
“The repurchase program affirms our confidence and optimism in the long-term future of U. S. Steel and aligns with our commitment to create stockholder value,” U.S. Steel CEO David Burritt stated. “The strengthening of our balance sheet affords us the opportunity to return capital to our stockholders.”
A company buying its own shares tends to drive up the value of existing stock, much of which is held by company executives whose compensation includes company stock. In 2018, companies bought up more than $1 trillion in shares of their own stock, according to Barron’s. Simultaneously, many companies that benefited from the Trump tax cuts laid off workers despite hopes of job creation, like Verizon, Union Pacific, and more recently, Lowe’s.
(Featured image: Margo Wright/Creative Commons)
Carl Gibson is a politics contributor for Grit Post. His work has previously been published in The Guardian, The Washington Post, The Houston Chronicle, Al-Jazeera America, and NPR, among others. Follow him on Twitter @crgibs or send him an email at carl at gritpost dot com.