No sooner had the new tax cuts been signed and companies were already making big announcements on how they were going to drive growth and earnings in the new era of lower corporate rates.

Boeing announced a $300 million boost to employee training, workplace infrastructure and other programs. AT&T made headlines with a $1,000 bonus for more than 200,000 of its employees.

Many of the announcements centered on worker bonuses and wages. Both Fifth Third Bancorp and Wells Fargo announced they would be increasing the minimum wage to $15 an hour for all employees.

Fourth-quarter earnings could bring a wave of these programs when they begin late January, but the early announcements may signal a turning point in the economy, one several years in the making.

#-ad_banner-#Besides resolutions and holiday bills, the new year could bring higher wages for many, and I’ve found three sectors that could see outsized gains.

Who Cares Where Wage Growth Comes From?
More than 30 companies have already come out publicly to announce plans related to the new tax cuts. Most have involved share buybacks funded with the potential cash flow, but many have talked up higher wages and investments in workers. 

It’s not just large companies that could be putting more money in workers’ pockets next year. 18 states will see the minimum wage increase in 2018 for an estimated increase of $5 billion to 4.5 million workers. The increases range from minor inflation adjustments of $0.35 an hour in Michigan to larger jumps of $1 per hour to Maine’s minimum wage.

Naysayers might say that wage growth is way overdue given the employment rate and employer polls that consistently point to difficulty finding workers. The Bureau of Labor Statistics reports that annual growth in average hourly earnings has grown by just 2.2% over the last decade.

If we get a sudden jump in wages, they would argue that it’s all the pent-up demand on the supply side of labor.

If wages had grown at the 3.2% annual average reported before the recession, the average hourly wage for non-government employees would be nearly 10% higher than actual estimates.

The Federal Reserve has long argued that unemployment near historic lows should be pushing up wages and inflation along with it. Unemployment touched 4.1% in November, the lowest since 2000 and well below where many think the non-accelerating inflation rate of unemployment (NAIRU) stands.

The idea of the NAIRU makes intuitive sense. If everyone that wants a job has one, then employers will have to start increasing wages to persuade workers to change jobs. 

In practice, it just hasn’t worked that way and wage growth has stagnated for most of the recovery.

Either way, whether it’s from the tax cuts or longer-term economic strength, 2018 could see considerably higher wage costs for employers as they start announcing increases, driving consumer prices and forcing others to match.

Are Higher Wages a Good Thing?
A return of inflationary pressures would certainly be welcome by commodity producers, especially gold and other precious metals miners. The price of gold, a store of value during inflationary times, fell below $1,400 an ounce in 2012 and hasn’t broken back above a narrow range around $1,300 in years.

1. Miners could see shares boosted from repatriation of offshore earnings as well and the ability to shield income from taxes with immediate expensing of capital spending. The offset would be that the Federal Reserve may decide to raise rates faster than expected, which would boost the dollar and limit gains in real assets like precious metals.

2. Staffing firms could do well as employees look to other options if their employers won’t raise rates along with the trend. Firms like Robert Half International (NYSE: RHI) and ManpowerGroup (NYSE: MAN) would also benefit from higher wages through the fees the companies collect when they place an employee contract.

While ManpowerGroup is more internationally-diversified, Robert Half books nearly 80% of its revenue domestically and will benefit from the lower tax rate on U.S. business.

3. Financials should also do well in a wage-growth environment. The inflationary pressure would force up the long end of the interest rate curve, leading to greater profitability for lenders. Modest economic growth should also support loan demand from consumers and businesses. 

Not all sectors will benefit equally from higher wages or the potential for a return to inflationary pressures on the economy. 

Retail could be a mixed bag as high wage costs hit a labor-intensive sector, though revenue would rise on higher consumer spending. Consumers spend roughly a third of their spending on consumer discretionary items. The industry pays one of the highest average effective rates on taxes and could be a disproportionate beneficiary of recent tax cuts.

Risks To Consider: Sectors with labor-intensive businesses could see the benefits of higher prices and good economic growth wiped out by wage costs.

Action To Take: Position for the return of wage growth in 2018 with stocks in sectors that will benefit from inflationary pressures and consumer spending.

Editor’s Note: Introducing our Top 10 Stocks for 2018… Stock #2: lets you own a stake in every Hollywood movie and yields 12.6%. Stock #3: has higher profit margins than 98% of all companies on the S&P 500. Click here to get their names and ticker symbols.