Minnesota’s Economic News — W/E 7/1/22
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More “crumbs” as Nancy Pelosi put it for the workforce of another mega Minnesota employer, thanks to the federal tax cuts. Hormel Foods recently jacked up beginning wages to $13 an hour and offered stock options to employees with increased revenue from the Tax Cuts and Jobs Act. The Austin, Minnesota company best known for Spam shared the good news in the Rochester Post Bulletin.
“Tax reform will have a clear benefit to all Hormel Foods stakeholders — our shareholders, our employees, and the communities in which we operate,” Hormel President and CEO Jim Snee said in the announcement. “The ongoing cash tax benefit will provide additional funds, allowing us to accelerate the growth of our business.
“We intend to make additional strategic, disciplined capital investments into innovation, technology, and automation, which will improve our operating efficiencies and enhance margins,” he added. “We also plan to invest a portion of the tax benefit back into our business to drive incremental sales and earnings growth.”
Tax reform has already saved Hormel tens of millions of dollars in the first quarter since its passage.
Hormel stated that the Tax Cuts and Jobs Act signed by President Donald Trump in December saved the Fortune 500 company $63 million in the first quarter of the year, and it will inject an estimated $110 to $140 million to cash flow in fiscal 2018. The cuts dropped the company’s effective tax rate for the first quarter to 0.6 percent from 33.7 percent for the same quarter in 2017.
Snee also announced that Hormel will continue to raise its starting wages following the $13 an hour increase. The company plans to bump the starting wage to $14 an hour by the end of fiscal 2020.
The southern Minnesota food processing giant will also share the profits with the communities in which it operates, pumping $25 million more over the next five years in donations. Shareholders will benefit, as well.
Hormel also expects to pass some of the tax savings on to its shareholders. Long known as a strong income generator for investors, Hormel has provided dividend increases for 52 consecutive years.
The Austin company issued a similar employee benefit in 2007, when it awarded more than 18,000 workers stock options for 100 shares each as a long-term investment in Hormel.