DURHAM – Optimism among US business executives is at an all-time high in the wake of tax reform and that’s good news for employees as well as people seeking work. Employment is expected to surge 3 percent, and pressure is growing to increase wages.

According to the quarterly Duke University-CFO Global Business Outlook index, optimism is at a record high.

As a result, more than 40 percent of companies plan to increase wages.

Also, 38 percent plan to step up hiring.

The Optimism Index rose to 71 on a 100-point scale in the quarterly survey, which ended March 2, and has climbed three consecutive quarters to top the 70 barrier.

“The extremely high level of business optimism is tied to the recently passed corporate tax reform,” said John Graham, director of the survey. He teaches finance at Duke’s Fuqua School of Business. “Our analysis of past results shows the CFO Optimism Index is an accurate predictor of future economic growth and hiring, therefore 2018 looks to be a very promising year.”

The survey dates back 88 consecutive quarters.

HIRING CONCERNS

However, executives also are growing increasingly concerned about finding and retaining workers.

Some 45 percent of CFOs say work force issues are a “top concern,” up 2 points from the previous survey to a two-decade high.

“The tight labor market continues to put upward pressure on wages,” said Chris Schmidt, senior editor at CFO Research. “Wage inflation is now listed near the top half dozen concerns of U.S. CFOs.”

Hundreds of companies have already given bonuses to workers after tax reform passed, and many have disclosed plans to expand while adding jobs. Apple, for example, led by Duke graduate Tim Cook, plans to build an additional corporate campus and expand its US workforce.

“Some benefits of tax reform are already being felt, while others will unfold over the next several years,” Graham explained. “Among other things, U.S. companies say tax reform will lead to greater profitability, investment, hiring and wages.”

SURVEY HIGHLIGHTS

Other highlights from the survey:

  • 66 percent of CFOs say tax reform is boosting their firm
  • Of those, 36 percent say the impact is medium or large
  • 36 percent of firms plan to increase US investment
  • And 29 percent of firms that offer pensions say they will increase pension contributions
  • The average tax rate on US firms is falling about 5 percent to 18.8 percent
  • Healthcare costs are expected to climb 7 percent

That lower rate also has attracted interest from outside the US.

“About half of Canadian, Latin American and Asian CFOs say that the reduced U.S. corporate income tax rate makes the U.S. a more attractive place to do business.,” the survey says.

The CFO survey also found increased optimism among executives outside the US.