Stock Buybacks: Driving a High-Profit, Low-Wage Economy

By Lenore Palladino |

Download Report

The dramatic rise in stock buybacks following the passage of the GOP tax plan, also known as the Tax Cut and Jobs Act, has elevated the role stock buybacks play in on our economy. Estimates have shown more than $100 billion in new stock buyback programs have been authorized since the tax law’s passage. Additionally, the rise in buybacks is a stark example of America’s “shareholder first” economy, in which the rules serve corporate executives and shareholders at the expense of workers, consumers, and broad-based economic growth. The significant rise of stock buybacks over the last 30 years is both a symptom and a cause of the high-profit, low-wage corporate sector and economy we see today.

What are stock buybacks? And why do they matter? The dramatic increase in stock buybacks of late points to a larger story about the problems with our economy, but there are several reasons why stock buybacks alone are troubling. In a new issue brief, Roosevelt Senior Economist and Policy Counsel Lenore Palladino defines stock buybacks, examines the rising prevalence and economic consequences of this practice, and outlines policy solutions to address this fast-growing trend.

There are several steps policymakers can and should take to limit the harm of this extractive corporate behavior that jeopardizes workers, consumers, and broad-based economic growth. Ending the dominance of the “shareholder first” ideology within America’s largest public corporations—our country’s biggest employers—is necessary in order to build sustainable prosperity for all in the 21st century.

 

Stock Buybacks: Driving a High-Profit, Low-Wage Economy by Roosevelt Institute on Scribd


Also published on Medium.

Lenore Palladino is the Senior Economist and Policy Counsel at the Roosevelt Institute, where she brings expertise to Roosevelt’s work on inequality and finance. Palladino earned a PhD in economics from The New School University and a JD from Fordham Law School. Her research and writing focus on financial reform, financial taxation, labor rights, and fiscal crises. Her publications have appeared in The Nation, The New Republic, State Tax Notes, and other venues.