GARDINER — About 300 employees of a Gardiner-based company are receiving bonuses Monday, following changes to the federal tax code enacted in the closing days of 2017.
Everett J. Prescott Inc., which distributes waterworks materials, joins dozens of other companies across the region and the country that have paid out bonuses to employees following the Federal Tax Cut and Jobs Act being signed into law by President Trump.
The news came Friday at a companywide managers’ meeting, held at Everett J. Prescott Inc. headquarters in Gardiner and at the Senator Inn & Spa in Augusta.
Peter Prescott, chief executive officer of the company his father founded, said employees who have been with EJP, along with its five sister companies – PEP Transportation, RED HED Manufacturing, Quality Water Products, Plastic Pipe Fabrication and the University of Prescott – will receive a $1,000 bonus. Employees with less than a year of service will receive a $250 bonus.
“We thought if we’re going to do it, we’d better do it,” Prescott said.
The managers are expected to distribute the bonuses when they return to their offices Monday.
In all, the family-owned company employs about 300 people across 26 locations in New England, New York, Ohio and Indiana. EJP, which celebrated 60 years in business in 2015, is one of the largest privately owned U.S. distributors of waterworks products.
While some employees have been on staff for only a short time, Prescott said the average length of service in the company is 20 years.
Sheena Bunnell, professor of business economics at the University of Maine at Farmington and a member of the state Consensus Economic Forecasting Commission, said giving bonuses like these will have a positive short-term impact on local economies.
“People will say, ‘I have this, and now what will I spend it on?'” Bunnell said.
They may use it to pay off debt, or they may spend it on some sort of recreational or lifestyle activity, Bunnell said.
The tax legislation, which went into effect on Jan. 1, cut the corporate tax rate from 35 percent to 21 percent.
“This is classic econ 101,” Bunnell said.
With an historically low unemployment rate in Maine, the demand for labor is high and the labor market is tight.
“We have employers who really want to recruit and retain talent,” she said. “If you want to keep your current employees, one of the ways is to give them a bonus.”
EJP is not alone in making this move. In January, Camden National Bank announced it would award $1,000 to all non-executive full-time employees and $750 to all part-time employees. Bank officials said they also plan to give raises to employees. A consultant will help determine what those raises should be.
While Camden National Bank and EJP both have their headquarters in Maine, Maine employees of other companies such as Home Depot and Lowe’s also have been awarded bonuses this year; in some instances, companies such as Walmart have included raises as part of the package.
That, Bunnell said, is another tactic to hold on to employees in a tight labor market.
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