Five major U.S. corporations that have laid off thousands of workers in recent weeks have simultaneously dished out hundreds of millions of dollars in cash dividends to wealthy shareholders, drawing outrage from Sen. Bernie Sanders and others who say the companies should be using the money to keep people employed.
The Washington Post reported Tuesday that manufacturing giant Caterpillar, toolmaker Stanley Black & Decker, clothing company Levi Strauss, office furniture company Steelcase, and World Wrestling Entertainment have paid out a combined $700 million in cash dividends to shareholders while they shutter operations and lay off employees as the Covid-19 pandemic continues to ravage the U.S. economy.
"They are not alone," the Post reported. "As the pandemic squeezes big companies, executives are making decisions about who will bear the brunt of the sacrifices, and in at least some cases, workers have been the first to lose, even as shareholders continue to collect... Caterpillar, for example, announced a $500 million distribution to shareholders April 8, about two weeks after indicating that operations at some plants would stop."
"In a downturn like this, the first thing a company should do is give up any distributions to shareholders. But in a crisis, companies will differ. Some will care... and some will rob the workers."
—William Lazonick, University of Massachusetts at Lowell
Stanley Black & Decker, a fortune 500 company, announced at the beginning of April that it planned to lay off workers due to the coronavirus pandemic.
"We are in a strong position as we face today's challenges and are taking the necessary actions now to protect our employees and the business while positioning the company to thrive into the future," CEO James Loree said at the time.
Stanley Black & Decker issued a $106 million dividend to shareholders just two weeks after announcing job cuts, according to the Post. Levi Strauss rewarded shareholders with $32 million in dividends on April 7, the same day the company said it would furlough all of its U.S. retail store employees.
SCROLL TO CONTINUE WITH CONTENT
Never Miss a Beat.
Get our best delivered to your inbox.
In a tweet Wednesday morning, Sen. Bernie Sanders (I-Vt.) called the companies' behavior "outrageous."
"Instead of spending hundreds of millions of dollars on dividends to enrich wealthy shareholders, Caterpillar, Black & Decker, Levi Strauss, and other corporations should be using this money to compensate the thousands of workers they laid off."
Bharat Ramamurti, a member of the congressional panel overseeing the Trump administration's use of corporate bailout money, pointed out that "there's nothing stopping" large companies from receiving taxpayer bailout money and continuing to lay off workers.
It is unclear whether any of the companies examined in the Post report have received bailout funds from the Treasury Department.
William Lazonick, emeritus economics professor at the University of Massachusetts at Lowell, told the Post that "in a downturn like this, the first thing a company should do is give up any distributions to shareholders."
"But in a crisis, companies will differ," said Lazonick. "Some will care... and some will rob the workers."