A ‘Buyback’ for Our Future?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

People who are trying to do good — with a Green New Deal, for instance, or Medicare for All — regularly find themselves confronting a simple and sometimes sneering gotcha question: So where’s the money coming from?

How about we start putting this same simple question to the top executives of Corporate America?

These execs are currently spending incredibly vast sums buying back their own companies’ shares of stock off the open market. In 2018, researchers at Dow Jones report, 444 of America’s top 500 firms spent dollars on stock buybacks. Lots of dollars: $806.4 billion in all, up 55 percent over the year before and up 37 percent over the previous all-time buyback annual record high.

These stock buybacks have no redeeming social value. Buybacks don’t make corporations more efficient or effective. They just make the rich richer. Buybacks reduce the volume of shares that trade, in the process upping earnings per share and share value. Who benefits from these upticks? Top corporate execs see an immediate boost. Over 80 percent of their pay comes from stock-based compensation.

The wealthy overall benefit, too. America’s top 1 percent, researchers at Goldman Sachs observed earlier this year, now own half of all the nation’s shares of stocks, with nearly 85 percent in the pockets of America’s wealthiest 10 percent.

The dollars corporate execs put in buybacks could, if invested elsewhere, help significantly share the wealth the modern American economy creates. Imagine how much brighter our future would be now if the over $5 trillion that S&P 500 corporations have spent on buybacks since 2007 had gone instead to paying higher wages or training workers in new skills or making corporate operations more eco-friendly.

And that brings us back to our original question: Where’s all the money for these buybacks coming from? Corporate America “earned” a good share of that cash the old-fashioned way — by exploiting workers, squeezing consumers, and shunting the cost of cleaning up corporate messes onto the rest of us. Corporate execs also raise multiple millions for buybacks by taking on new debt. But these execs have a plush new source of buyback cash as well: the Trump corporate tax-rate cut enacted in December 2017.

The White House promised that corporations would use their savings from this corporate tax cut to create jobs and promote prosperity. Corporations did create prosperity — via buybacks — for the people who run corporations. The rest of the economy, the latest stats seem to indicate, is sinking into a new recession.

What could we do about all this? A good starting place would be undoing the Trump corporate tax cut or keeping it in place only for corporations truly helping create prosperity for all. That would be rather simple to pull off. We could, as one example, deny corporations tax-cut dollars if they pay any of their top execs over 25 times what they pay their most typical workers.

Back in the middle of the 20th century the pay gap within most all U.S. corporate enterprises never exceeded that 25-to1 ratio. CEOs at major corporations today now average over 350 times their worker pay. In 2017, Bloomberg reports, some 32 major companies paid their top execs over 1,000 times the pay that went to their most typical workers.

Will lawmakers in the United States ever show the spine necessary to make a serious move against corporate buybacks? Earlier this year, Senators Bernie Sanders and Chuck Schumer announced plans to introduce legislation that would let corporations buy back their own shares only if they were already investing in shared prosperity, as evidenced by “things like paying all workers at least $15 an hour, providing seven days of paid sick leave, and offering decent pensions and more reliable health benefits.”

Senator Tammy Baldwin has an even better idea. She’s just reintroduced her landmark legislation that completely bans open-market stock buybacks.

“Corporate profits should be shared with the workers who actually create them,” the Wisconsin lawmaker notes. “It’s just wrong for big corporations to pocket massive, permanent tax breaks and reward the wealth of top executives with more stock buybacks, while closing facilities and laying off workers. We need to start rewarding hard work, and not just wealth.”

In other words, let’s buy back our future.

***

Reposted from Our Future

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches, From Campaign for America's Future

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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