FOR IMMEDIATE RELEASE:
May 22, 2018
Alexander Tucciarone, email@example.com, 516-263-9775
NEW ROOSEVELT INSTITUTE REPORT: LIMITS ON STOCK BUYBACKS AT WALMART COULD MEAN HUGE RAISES FOR WORKING FAMILIES
Research From Leading Progressive Think Tank Highlights Need to Crack Down on Stock Buybacks
NEW YORK, NY — If Walmart were to redirect $10 billion that it is authorized to spend on stock buybacks toward its low-wage employees this year, it could increase the hourly pay of a million Walmart employees by $5.66 an hour, according to a new report released by the Roosevelt Institute today. Making the Case: How Ending Walmart’s Stock Buyback Program Would Help to Fix Our High-Profit, Low-Wage Economy explains how re-allocating the vast sums Walmart spends on stock buybacks towards employee compensation would give its 1 million U.S.-based hourly employees a significant raise.
Stock buybacks, the method by which a company repurchases its own stocks to drive their value up, have been a fairly common practice for years and have accelerated since the passage of the GOP tax law. It is a process that rewards shareholders and siphons resources that might otherwise go to making more long-term investments or raising wages. Walmart embodies this practice; it has spent $67.8 billion on stock buybacks over the past decade and its board recently authorized an additional $20 billion through the end of 2019.
The new report illustrates how this harms Walmart’s employees. The starting wage for many Walmart workers is $11 an hour. In 2017, Walmart spent $8 billion on buybacks. If Walmart redirected $10 billion in 2018 toward Walmart’s low-wage employees (out of the $20 billion that it is authorized to spend over a two-year period), it could increase their hourly pay by $5.66 an hour. This raise would dramatically improve the financial standing of the million hourly Walmart employees across the country. Alternately, if Walmart granted its hourly employees $10 billion in stock through its Associate Stock Purchase Program, every employee’s net wealth would increase by $10,000.
“The fact that Walmart pays its hourly workers poverty wages while its shareholders become even wealthier from massive stock buybacks is a choice,” said Lenore Palladino, the report’s co-author and Senior Economist and Policy Counsel at the Roosevelt Institute. “Walmart employs more women, and more workers of color, than any other private employer in the United States, and its choices affect the entire economy. Policymakers have the power to rein in stock buybacks in this time of wage stagnation. They should choose to use it.”
“The extent to which Walmart and other major corporations like it favor shareholders over workers is a major problem for our economy,” said Steph Sterling, Vice President for Advocacy and Policy at the Roosevelt Institute. “Every dollar spent making CEOs and shareholders even richer is a dollar that is not spent investing in innovation or the people who work full-time but still struggle to make ends meet. Building an economy that produces broadly shared prosperity will require rewriting the rules that allow and even encourage extractive practices like stock buybacks.”
This latest report from the Roosevelt Institute comes ahead of the May 30 Walmart shareholder meeting, where a shareholder is expected to submit a resolution concerning buybacks. It also comes at a time of growing controversy around stock buybacks. At the time of the passage of the GOP tax law, conservative policymakers argued that the cuts to corporate rates would translate to growing wages for working people across the country. In reality, the savings from that tax cut have overwhelmingly been spent on stock buybacks rather than higher wages for workers. Elected officials have begun to respond, with Senators Tammy Baldwin (D-WI) and Cory Booker (D-NJ), both introducing separate legislation which would require corporations to either halt buybacks or direct commensurate money spent on buybacks to workers.
For years, the Roosevelt Institute has sounded the alarm over how practices like buybacks harm the entire economy and worsen inequality. In March, Palladino released the report Stock Buybacks: Driving a High-Profit, Low-Wage Economy, and in January she released Corporate Financialization and Worker Prosperity: A Broken Link. And in the run up to the 2016 election, the Roosevelt Institute released Untamed: How to Check Corporate, Financial, and Monopoly Power.
About the Roosevelt Institute
Until the rules work for every American, they’re not working. The Roosevelt Institute asks: what does a better society look like? Armed with a bold vision for the future, we push the economic and social debate forward. We believe that those at the top hold too much power and wealth, and that our economy will be stronger when that changes. Ultimately, we want our work to move the country toward a new economic and political system: one built by many for the good of all.
It takes all of us to rewrite the rules. From emerging leaders to Nobel laureate economists, we’ve built a network of thousands. At Roosevelt, we make influencers more thoughtful and thinkers more influential. We also celebrate –and are inspired by– those whose work embodies the values of both Franklin and Eleanor Roosevelt and carries their vision forward today.
Also published on Medium.