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stock buybacks
Why Is Trump Still Clobbering Harris on the Economy?
Really, after watching Trump’s debate meltdown, how is it possible for any sane human to believe he has the capability to improve anything at all? But still, Democrats must answer this key question—and turn things around—before it's too late.
Sep 16, 2024
Despite the drubbing Trump took during the debate, he still holds a commanding 20 percent lead (55 to 35 percent) over Harris on the economy, according to the CNN post-debate poll. Democrats should be very concerned about this because economic issues are extremely salient in key swing states like Pennsylvania, Wisconsin, and Michigan.
But really, after watching Trump’s debate meltdown, how is it possible for any sane human to believe he has the capability to improve anything at all?
The problem isn’t Trump’s crumbling abilities, nor is it a sure thing that abortion will ‘trump’ the economy this cycle, as many Democratic strategists are counting on.
The problem is that a significant segment of the electorate views the Democrats as part of the corporate elite that has grabbed unfair advantages. About 70 percent of Americans say that our economy “unfairly favors the powerful interests.” That’s also what we hear from workers in our political economy classes. They consistently tell us that “corporate greed” is the culprit.
As professor Jedediah Britton-Purdy wrote in The New York Times, “Compared to Mr. Trump’s Republicans, the Democrats remain the party of protecting the system and making it work — the small-c conservative party of the liberal but comfortable coasts and other economic hubs.”
The problem is that a significant segment of the electorate views the Democrats as part of the corporate elite that has grabbed unfair advantages.
In a twisted, demented way, Trump looked every bit the mega-disrupter during the debate last Tuesday, as he flailed away at everyone and everything. He was the picture of disorder and decidedly not part of the established order.
However, shaking up the established order is what many voters want. About 15 percent of registered voters believe that the political and economic “system needs to be torn down entirely.” Another 55 percent believe “the system needs major changes.”
Harris and the Democrats try to address this anger through a myriad of reforms that do not come across as “major changes.” Investing in new jobs for the future is certainly admirable, but the billions in subsidies for the greedy corporations involved in every “public-private” infrastructure investment look like the same-old, same-old. Tax breaks for childcare and new business startups are important, but they aren’t major challenges to the established order. Going after oligopolistic price gouging is a start, but corporate mass layoffs and job insecurity are not mentioned.
Harris/Walz should be paying much closer attention to this: 70 percent of workers, right now, are preparing for job cuts, according to a MarketWatch survey.
There is a material basis for this fear. The Bureau of Labor Statistics reports that “from January 2021 through December 2023, there were 2.6 million workers displaced from jobs they held for at least three years.” And an additional 3.7 million with fewer than three years tenure lost their jobs “because their plant closed or moved, there was insufficient work for them to do, or their position or shift was abolished.” The research for my book, Wall Street’s War on Workers, found that more than 30 million workers have suffered through mass layoffs since 1996.
If the Democrats want to take back the economy from Trump, they must speak directly to the 70 percent who are worried about losing their jobs.
The economy for working people has fundamentally changed since the deregulation of Wall Street starting in the 1980s. Now, in good times and in bad, mass layoffs are common as corporations pour more and more money into their outrageous pay packages and stock buybacks for their Wall Street investors. (A stock buyback is when a corporation uses its money or borrowed funds to repurchase its own shares in the stock market. This raises its share price without adding any value at all to the company. Stock buybacks were considered illegal stock manipulation until their deregulation in1982. Please see Wall Street’s War on Workers for all the sordid details.)
In their 2024 platform, the Democrats waved at this problem by promising to raise the tax on stock buybacks from one percent to four percent. But that won’t put a dent in the more than $1 trillion in stock buybacks projected for 2025. Time and again those buybacks are funded by mass layoffs.
So why aren’t the Democrats attacking mass layoffs?
The problem is that most elected officials, including virtually all Republicans, really believe that layoffs are a natural law, like gravity, the result of market fluctuations, global trade, and new technologies. It’s all about unstoppable technological forces like A.I. and there’s nothing much that can be done except help create new jobs in the future. Those left behind will have to scramble. That’s the way of the world. That’s the basis for free enterprise, and that’s what freedom is all about. (Janis Joplin, thanks to Kris Kristofferson, cut through this BS: “Freedom’s just another word for nothing left to lose,” she sang.)
Why aren’t the Democrats attacking mass layoffs?
But that fatalism reflects how much politicians fear Wall Street. Already, we can see Harris back-peddle a bit on corporate taxes, and she’s facing pressure to tone down her proposed wealth tax. I’m sure the Democrats worry that if they attack stock buybacks and mass layoffs, Wall Street will cry Marxism! Socialism!
But if the Democrats want to take back the economy from Trump, they must speak directly to the 70 percent who are worried about losing their jobs.
For starters, they should re-read their 2020 Democratic Party platform, which said: “Taxpayer money should not be used to pay out dividends, fund stock buybacks, or give raises to executives.” Unfortunately, that plank only applied to Covid relief funds.
But, as I wrote here, it could easily be expanded to read: “No taxpayer money should be awarded to corporations that lay off taxpayers and conduct stock buybacks.”
Harris/Walz could pledge to add that one line to the $700 billion the federal government awards each year to corporations for goods and services. (It can probably be done without an act of Congress.)
When corporations scream that it will kill free enterprise if they can’t lay off workers, the response is simple. 1) If you don’t like the rule, don’t take the federal money. 2) If you still want to lay off workers, you can do so but those layoffs have to be voluntary, not compulsory. Use some of your lavish stock buyback funds to offer workers ample severance so that they voluntarily leave your firm, something that is often done for management employees.
Would corporations be willing to play by these rules?
Trump’s 2016 intervention in a Carrier air conditioning plant closing suggests they would. At that time, Carrier, under pressure from Trump, reversed its decision to move about 800 jobs to Mexico. Polling showed the intervention was wildly popular with the American people.
Why did the CEO give in? Why didn’t he scream about socialism and the collapse of the free enterprise system? Here’s what he said. “I was born at night, but it wasn’t last night. I also know that about 10 percent of our revenue comes from the U.S. government.” He was not about to bite the hand that feeds him.
Nor will Corporate America. They will not walk away from $700 billion in tax-payer money even if they have to abandon compulsory layoffs.
Calling for this rule would show that the Democrats are willing to disrupt the established corporate order and attack the unconscionable greed that is costing working people their livelihoods.
As Bernie Sanders put it back in 1996, “No Payoffs for Layoffs.”Keep ReadingShow Less
Everyone Talks About the Economy, But No One Does Anything About It!
Buried in the 2020 Democratic Party platform is a little discussed line that could hold the key to reducing wanton job destruction. Will Kamala Harris seize this opportunity?
Sep 09, 2024
The number one issue in the election this year, polls tell us, is “the economy.” But what does that mean?
That depends on who you are and where you sit in the vast structure of inequality that engulfs us. If you’re sitting pretty, “the economy” means an expanding gross national product, the growth of your investments, higher stock prices, and lower personal and corporate income taxes. “The economy” for the well-to-do is all about increasing income and wealth with no interference from government meddlers.
For the rest of us, those sitting lower down, “the economy” is deeply connected to finding and holding onto a job that provides a decent income and benefits. Without a stable job it doesn’t much matter if housing or food is expensive, because if you don’t have work you can’t afford much of anything. You’re in trouble, big trouble. Proposals for systemic economic growth seem far removed from your day-to-day struggles.
A low unemployment rate, to be sure, is critically important to working people. Tight labor markets help drive up wages and create job more openings, but that’s not the same as having a stable job. Unemployment can be low and you still can be bounced from job to job, continually undermining your standard of living.
How do these corporations get the money for nearly three-quarters of a trillion dollars in stock buybacks each year? They lay off workers, freeing up cash by reducing payroll expenses. The more the better.
The research from my book, Wall Street’s War on Workers, shows that more than 30 million workers have lost their jobs due to mass layoffs since 1996. The usual explanation for these layoffs puts the blame on new technologies and the inevitable decline of manufacturing jobs because of stiff global competition from workers in other countries who earn much less.
But that’s not the whole story. If it was, then why are high-tech workers also seeing their jobs disappear? (Spoiler alert, it’s not AI.) In 2023, approximately 264,220 jobs were lost in tech companies, the crown jewels of our post-industrial economy. So far this year, another 135,811 have evaporated.
The Challenger Report, which tracks overall corporate layoffs, finds that 75,891 jobs were cut in August 2024. It also shows that on average this year, 891 jobs per month were cut due to AI. (For a fuller description on why new technologies like AI are not the primary job killers, please see Chapter 11 in Wall Street’s War on Workers.)
Why is there so much job instability? For the most prosperous corporations, it’s not due to a lack of profits, technology, or foreign competition. Meta, Alphabet, and Microsoft laid off more than 40,000 workers in 2022-23 despite booking hundreds of billions of dollars in profits.
These high-tech behemoths kill jobs because of what “the economy” means to their CEOs and to their major Wall Street investors. Their economy values higher stock prices, which translates into enormous incomes for investors and the company executives who are mostly paid through stock incentives.
How do they raise the stock price? Better products? Sure, that works but it takes too much time. The best and surest way to quickly raise the stock price is through a stock buyback, which before SEC deregulation in 1982 was an illegal form of financial manipulation. In a stock buyback, a company uses its own cash or borrowed money to repurchase its own shares in the stock market. These stocks are retired, reducing the number available and increasing the company’s earnings per share. The buyback doesn’t improve the company’s performance, it simply raises the price of the shares and shovels money to the wealthiest investors and company officials. This is plain and simple stock manipulation, something that Econ 101 tells us is a no-no in free-market capitalism where prices are supposed to be set by market supply and demand, not by one company’s self-dealing.
How do these corporations get the money for nearly three-quarters of a trillion dollars in stock buybacks each year? They lay off workers, freeing up cash by reducing payroll expenses. The more the better. Which is how the very same economy can look so very different to those siphoning off corporate wealth and those losing their jobs.
How are the two presidential candidates addressing this problem?
Trump wants to make it worse. He’s in love with Elon Musk, who he called in a recent interview “the greatest cutter.” He praises the way Musk laid off half of the workers at Twitter to help cover the costs of his purchase of the company. Trump now says he wants Musk to head a government efficiency commission, so he can cut, cut, cut government employees. And, if you think Trump will halt or even limit stock buybacks, please share your meds!
What about Harris? The Democratic Party platform in 2024 calls for an increase in the stock buyback excise tax from 1 to 4 percent. That’s better than nothing, but that’s nowhere near high enough to discourage stock buybacks and the job slashing that goes with them.
Voluntary buyouts are common for higher-level white-collar employees, why not make them the rule of the land for companies doing business with the government?
But buried in the 2020 Democratic Party platform is a little discussed line that could hold the key to reducing wanton job destruction. It reads, “Taxpayer money should not be used to pay out dividends, fund stock buybacks, or give raises to executives.” Unfortunately, this refers only to pandemic assistance funds to corporations, but it offers a way forward.
Harris could expand on that line to say,
“In my administration, no taxpayer money will go to corporations who lay off taxpayers and conduct stock buybacks. That means the $700 billion of taxpayer money per year in federal grants and contracts will not go to any corporation that lays off taxpayers or conducts stock buybacks.”
Corporations receiving tax-payer money would be free to restructure if they needed to, but would only be permitted to conduct voluntary layoffs, which means they would have to dip into their massive stock buyback funds to create wage and benefit severance packages sufficient to encourage workers to move on. Voluntary buyouts are common for higher-level white-collar employees, why not make them the rule of the land for companies doing business with the government?
In 1992, during Bill Clinton’s first campaign for president, James Carville famously said of the race’s most important issue, “it’s the economy, stupid.” Today, “the economy” means different things for the wealthy than it does for the rest of us. Maybe Carville’s mantra needs revision: “It’s job loss, stupid!”
Losing your job is one of the most stressful life events, but the troubles of those laid off are often papered over with promises of bright new jobs in the future that go to someone else. The candidate who turns this stress into action and calls for an end to the needless slaughter of jobs via stock buybacks could, in my humble opinion, run away with this election.Keep ReadingShow Less
How Corporate Greed Hurts Workers and Customers at Places Like Dollar General
At many big stores, workers are short-handed and face difficult working conditions—even when their companies are highly profitable.
Sep 07, 2024
I’ve always felt that working in customer-facing jobs is my calling. I’m passionate about making people feel comfortable when they enter a business, be it a retail store or a restaurant.
But it was hard to keep that passion when I worked at Dollar General. Like workers at many other big retailers, we were so short-staffed and poorly trained that it was next to impossible to give good customer service.
My interview and first day on the job went well. Managers, co-workers, and customers all seemed pretty happy. The second day was a complete 180. All of a sudden I was thrown into my duties with zero training. They even scheduled me to close out the store that day without instructions.
Dollar General has also been taking profits that could go toward worker pay or fixing up their stores and spending them instead on stock buybacks.
Quickly I had shifts where I was the only worker for hours at a time, dealing with long lines of impatient customers, tons of merchandise to stock, and frustrated vendors subject to long wait times.
I frequently had to get overstock items from unstable top shelves and constantly worried I’d fall. The back door also wouldn’t close correctly—and even though I brought it up to management several times, it remained an easy way for anyone to sneak in.
I didn’t know it then, but Dollar General has repeatedly faced huge penalties for workplace safety violations.
Once I was called out to help with a truck delivery of refrigerated and frozen products. I went to grab a tote bag full and had to do a triple take because it was full of black mold. Another afternoon, I picked up a bag of potting soil to stock and realized it was covered with dead insects, which got all over the floor and other products.
When I had problems like these with merchandise, I was expected to contact the warehouse myself. But that was hard to do, given how understaffed we were.
Dollar General isn’t the only tough place for retail employees. At many big stores, workers are short-handed and face difficult working conditions—even when their companies are highly profitable.
Where is all the money going? Well, I can tell you not much went to me.
I made $14.75 an hour for part-time hours, even though I often wound up working full-time. After the first few weeks, my schedule became so unpredictable that I sometimes worked only a few hours a week. Eventually it just wasn’t worth all the hard work and stress, so I quit.
By contrast, Dollar General CEO Todd Vasos made nearly $10 million last year—521 times as much as a typical worker at his company, the Institute for Policy Studies reported recently.
Dollar General has also been taking profits that could go toward worker pay or fixing up their stores and spending them instead on stock buybacks. That’s when a company repurchases its own shares to inflate the value of its stock and make CEOs even richer. Between 2019 and 2023, the company spent $9 billion on this financial scam.
I also learned from the Institute’s report that 88% of Dollar General workers who are eligible to participate in the company 401(k) plan don’t have one dime in their accounts. Low-wage workers like me just don’t earn enough to be able to save for our retirement.
I saw up close how a business that’s focused on exploiting employees to make those at the top even richer isn’t just bad for workers like me, but for customers as well. And anyone who’s worked for one of these low-wage companies can tell you Dollar General is hardly unique.
If we want a strong economy, we need to do more to make sure all workers can make a decent living and feel safe and respected in their workplace.
Keep ReadingShow Less
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