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sarah anderson
Top Low-Wage Corporations Have Dumped $522 Billion Into Stock Buybacks Since 2019
New research from the Institute for Policy Studies shows that 100 major U.S. companies are prioritizing share repurchases and exorbitant CEO pay at the expense of their employees.
Aug 29, 2024
An analysis published Thursday shows that the 100 leading U.S. corporations with the lowest median worker pay poured more than half a trillion dollars into stock buybacks over the past five years, further enriching wealthy executives and shareholders while ordinary employees struggled to make ends meet.
The Institute for Policy Studies (IPS), a progressive think tank that has been tracking executive compensation and stock buyback trends for decades, found in its 30th annual "Executive Excess" report that the 100 S&P 500 companies that pay their median workers the least spent $522 billion on share repurchases between 2019 and 2023.
That list of corporations, which IPS dubs the Low-Wage 100, includes Lowe's, Home Depot, and Walmart. Lowe's "led the Low-Wage 100 share buyback charge," IPS found, spending $42.6 billion—an amount "large enough to have given each of the firm's 285,000 global employees an annual $29,865 bonus for five years."
Home Depot's buyback spree was slightly smaller than Lowe's at $37.2 billion between 2019 and 2023.
The low-wage companies' runaway spending on stock buybacks—which serve to artificially inflate stock prices, thereby pumping up executive pay packages—far outweighed their spending on employee retirement plans, IPS observed.
"The 20 largest U.S. employers in the Low-Wage 100 have spent—over the last five years—nine times as much on stock buybacks as on employee retirement plan contributions," IPS found.
"At a time when our country is deeply divided on so many issues, Americans have enormous common ground on the problems of extreme CEO-worker pay gaps."
The new IPS report also surveys the chief executive pay packages at the Low-Wage 100, showing that the companies on average paid their CEOs 538 times more than their median employees. The average CEO of a Low-Wage 100 company received $14.7 million in total compensation in 2023, according to IPS, while the median workers at those corporations received an average of $34,522 for the year.
"Ross Stores shows both the lowest median worker wage and the widest pay gap," IPS found. "In 2023, Ross CEO Barbara Rentler hauled in $18.1 million, 2,100 times as much as the $8,618 pay that went to her firm's median-compensated employee, a part-time store associate."
The new analysis was released amid growing national outrage over exorbitant CEO pay and stock buybacks, which have surged since former President Donald Trump signed into law massive corporate tax cuts in 2017.
Shawn Fain, president of the United Auto Workers, said during his prime-time speech at the Democratic National Convention earlier this month that "corporate greed turns blue-collar blood, sweat, and tears into Wall Street stock buybacks and CEO jackpots."
"It hurts workers. It hurts consumers. It hurts America," said Fain.
Sarah Anderson, director of the IPS Global Economy Project and author of the new report,
said Thursday that "at a time when our country is deeply divided on so many issues, Americans have enormous common ground on the problems of extreme CEO-worker pay gaps."
"Poll after poll shows that Americans across the political spectrum are fed up with overpaid CEOs and want lawmakers to take action," said Anderson, whose report points to a survey from June showing that 83% of Americans believe it's important for companies to prevent large pay gaps between their chief executives and typical employees.
To rein in out-of-control executive pay and buybacks, IPS urged federal policymakers to consider a range of legislative solutions, including higher taxes for companies with huge CEO-worker pay gaps and wielding federal contracts as leverage to crack down on share repurchases.
"What gets ordinary Americans particularly angry?" the report asks. "Watching major companies hand out massive CEO paychecks while their lower-level employees are struggling to get by."
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'We Should All Be Angry' That Corporations Spent Trump Tax Windfall on Buybacks: Expert
"Corporations took their tax windfalls and spent a trillion dollars of it in 2018 on stock buybacks instead of on worker wages or innovation," said Sarah Anderson of the Institute for Policy Studies.
Jun 12, 2024
An economic policy expert told the Senate Budget Committee on Wednesday that Americans should be outraged that large corporations funneled their massive gains from the 2017 Trump-GOP tax law into stock buybacks, further enriching executives and wealthy shareholders while skimping on worker pay.
"Whether you were for or against the 2017 tax cuts, I think we should all be angry that corporations took their tax windfalls and spent a trillion dollars of it in 2018 on stock buybacks instead of on worker wages or innovation," Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies, said during a Senate Budget Committee hearing titled, "Making Wall Street Pay Its Fair Share: Raising Revenue, Strengthening Our Economy."
Watch Anderson's testimony:
The Institute on Taxation and Economic Policy (ITEP) noted in an analysis earlier this year that during the first four years after former President Donald Trump's tax cuts took effect, the country's largest corporations collectively spent $2.72 trillion repurchasing their own shares—more than they spent "on investments in plants, equipment, or software that might have created new jobs and grown the economy."
In written testimony submitted to the Senate Budget Committee for Wednesday's hearing, Anderson pointed to data from the Congressional Research Service showing that U.S. corporations spent $1 trillion total on stock buybacks during the first year of the Tax Cuts and Jobs Act, which took effect in 2018. That year, U.S. billionaires paid a lower effective tax rate than working-class Americans for the first time in the country's history.
"S&P 500 firms alone spent $806 billion [on buybacks], a massive jump from the $519 billion they spent repurchasing stock in 2017," Anderson wrote. "Spending tax-cut windfalls and other profits on stock buybacks siphons resources from worker wages, R&D, and other productive investments that stimulate long-term growth. Analysts have documented the association between buybacks and worker layoffs, as well as reduced capital investment and innovation and wage stagnation."
In a Wednesday op-ed forCommon Dreams, Labor Institute executive director Les Leopold pointed out that John Deere, for example, has spent $12.2 billion on stock buybacks over the last two years alone while simultaneously slashing hundreds of jobs and offshoring production.
Leopold blasted the practice as "a blatant form of stock manipulation that was illegal until deregulated by the Reagan administration."
"For too long, Wall Street lobbyists have wielded excessive power to shape our tax code."
Wednesday's hearing was held following fresh reports that congressional Republicans are gearing up to slash taxes for the rich and large corporations even further if they seize control of the Senate in November and Trump—the presumptive GOP presidential nominee—wins another four years in the White House.
Anderson urged senators to use the looming expiration of some provisions of the 2017 tax law as an opportunity for reforms that target corporations that pay their CEOs excessively, tax Wall Street speculation, and discourage stock buybacks. In her written testimony, Anderson noted that increasing the 1% excise tax on corporate stock buybacks to 4% would generate $238 billion in new federal revenue over the next decade.
"For too long, Wall Street lobbyists have wielded excessive power to shape our tax code in ways that allow this lucrative sector to pay far less than their fair share of all the public services and infrastructure necessary for a healthy economy," Anderson wrote. "Continuing the status quo—or returning to the pre-2017 tax code—will not be acceptable if we are to meet the public investment needs of our time and reverse our country's staggering economic and racial disparities."
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