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

Labor Wins

From the AFL-CIO

On Tuesday, the labor movement drove historic wins for pro-worker candidates like Governor-Elect Andy Beshear in Kentucky and new legislative majorities in Virginia. Not only did union members come out to vote in droves, 270 union member candidates were elected to public office last night and counting. This adds to the total of more than 900 union members elected up and down the ballot in last year’s midterms, a product of the Union Member Candidate Program launched by the AFL-CIO just two years ago. The share of union members who won in the 2018 midterms is two-thirds. The program will continue through 2020 and beyond, electing even more union members to public office. 

“Our efforts recruiting, training and supporting labor candidates have led to the passage of pro-worker legislation from coast to coast and everywhere in between,” AFL-CIO President Richard Trumka said.

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