Corporations Should Share the Wealth Before Buying Back Stock

Sarah Anderson

Sarah Anderson Director, Global Economy Project, Institute for Policy Studies

These are good times for those at the top of the Walmart empire. Family members of the founders have seen their wealth grow about 10,000% since the 1980s. Today the Waltons are worth about $180 billion. And they own so much Walmart stock that four of them made $12.7 billionin just one day last year after a profit report bumped up their share price.

For Walmart CEO Doug McMillon, those strong profits turned into a $22 million paycheck.

But those at the top of the Walmart empire are not sharing the wealth. The CEO’s pay was 1,188 times as much as the pay for a typical Walmart employee.

And even after the Republican tax “reform” that was supposed to be so great for workers, Walmart still refuses to pay a living wage. Instead, those tax cuts are making already rich CEOs and shareholders even richer.

How is this happening? Walmart and other big U.S. corporations are using huge chunks of their tax windfalls to buy back their own stock.

These buybacks have no redeeming social value. They simply artificially inflate a company’s share price. That helps the rich who own the vast bulk of stock. At Walmart, the Walton family owns about half.

Buybacks also boost executive pay, since most of it is based on stock.

In other words, whenever companies go on a buyback spree, the rich just get richer.

Walmart announced plans in 2017 to spend $20 billion on stock buybacks over a two-year period. What if they spent some of those billions instead on worker pay? Berkeley researchers estimate it would cost Walmart less than $5 billion a year to raise its minimum wage to $15 an hour.

We should consider banning stock buybacks altogether, like they were until 1982. In the meantime, we should make sure companies can only repurchase their stock if they’re sharing the wealth. This would be good for workers, good for business, and good for the broader economy.

Posted In: Allied Approaches

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

A Friendly Reminder