Corporate Priorities: Billions Spent on Stock Buybacks Over Worker Raises for Low-Wage Employers

In recent years, while many American households grapple with tightening financial conditions, a significant number of U.S. corporations have engaged in considerable expenditures that primarily benefit shareholders rather than employees. This trend is particularly evident among corporations identified as low-wage employers, which have allocated vast amounts of capital towards stock buybacks instead of providing salary increases or enhancing capital investments.

A report from the Institute for Policy Studies, a progressive think tank, highlights that over the last five years, 93 out of the 100 largest low-wage employers in the United States collectively directed $522 billion towards stock repurchases. Stock buybacks serve to elevate share prices, consequently inflating executive compensation tied to stock performance. Notably, the largest twenty employers among them dedicated nine times more capital to stock buybacks than they contributed to employee retirement plans. This concerning trend underscores a fundamental misalignment of priorities within these organizations, where shareholder returns seem to take precedence over employee welfare.

The report, titled “Executive Excess,” also examines the disparity in pay between executives and their median worker counterparts at these companies. The earnings for employees within the so-called “Low-Wage 100” vary dramatically, with median annual compensation ranging from a mere $8,618 for part-time workers at Ross Stores to $51,084 for employees at the Kimberly-Clark Corporation, a manufacturer of consumer goods such as Kleenex. Unfortunately, the Securities and Exchange Commission prohibits companies from annualizing the pay of part-time workers when reporting median earnings, indicating a reliance on part-time labor can reflect poorly on a company’s business model.

In conclusion, this disparity highlights the urgent need for reassessment of corporate priorities. By prioritizing stock buybacks over fair wages, these low-wage employers perpetuate income inequality and fail to recognize the vital contributions of their workforce. It is imperative that stakeholders advocate for more equitable practices that benefit not only shareholders but also the employees who are foundational to the success of these corporations.