President Donald Trump’s budget director has told employees that they can expect a bump in paychecks this year.
The National Retail Federation (NRF), the trade group for large retailers, said that retail executives will likely receive a raise this year for a number of reasons, including the increase in federal sales tax and the fact that many retail chains have boosted wages to reflect higher inflation.
“I think the biggest factor is the fact of the higher sales tax that’s going to be in place, the fact there’s a higher payroll tax, and we’re also going to have to adjust wages,” said Brian Epps, the NRF’s vice president for communications and marketing.
“It’s going not just a one-time adjustment, but going into a year where we’re going to really see an increase in wages.”
Epps said that he and other industry executives are looking to cut back on overtime, because the increase would mean fewer hours per week, which would make it more difficult to make ends meet.
However, Epps also said that many people will be able to afford to shop at Target on Thanksgiving.
The NRF estimates that stores will pay $2,800 more for Thanksgiving this year, as compared to last year, when they received a bump of $2.50 for each $1 spent on food and drinks.
It expects that stores that receive a larger bump in food and beverage sales will also receive a smaller increase in food tax revenue.
For retailers like Target, the increase comes after the company announced that it will increase prices by $1.25 per pound, which will result in a $1 increase per order, according the NRFF.
It also said retailers will also have to raise prices on food to offset the increased tax.
The average grocery store will pay an average of $1 more per person per year, according a study conducted by Cornell University.
Epps also told employees last year that the tax increase would be passed on to customers, as they would have to pay more for food and food services.
“We will see an overall increase in grocery sales, and if we keep on doing that, I think that we’re looking at a $2 or $3 increase in overall sales, which is a good sign for the retail industry,” he said.
Eets said that Walmart and Kroger will likely see some of the same wage hikes.
“They have very, very high prices and they’re going after the consumers, and they’ll be trying to squeeze as much as they can out of the consumer base, and so they’re likely to be more than happy to increase prices,” Epps said.
The president’s budget office said that retailers will have to cut costs and trim expenses as they seek to increase profits.
“The federal government will continue to subsidize the retail sector with its tax incentives, such as tax credits for home goods, credit for gas stations, and other programs that support the retail business,” the budget office stated.
“In addition, the Office of Management and Budget will continue a review of the state and local tax systems to ensure that the full range of tax credits and other subsidies to support small businesses is being used to the maximum extent.”
The president also plans to push the Department of Education to help schools increase their workforce by $4.4 billion this year through a new funding package.
This will be paid for by reducing the corporate tax rate and by lowering the corporate rate.
“The President’s goal is to make sure that our schools are prepared for the challenges of this time of change and economic uncertainty,” a statement from the Office for Budget and Policy said.
“His budget seeks to expand access to quality education to help our nation’s children get ahead and stay ahead.”