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

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,

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How Stock Buybacks Strangle Innovation and Job Creation

Conventional wisdom says that the job crisis stems from a mismatch in the labor market or lack of business confidence. But in his special ND20 series, “Breaking Through the Jobless Recovery“, economist William Lazonick points the finger at stock manipulation. Where have all the good jobs gone? As I outlined last week, the disappearing act

The Lost Opportunity in Buyback Spending

With the CARES Act corporate bailout underway, large corporations are once again being rescued by a hurting American public. No one doubts that stabilizing the economy and saving jobs as a first priority is absolutely critical. What’s also necessary is to understand what factors—besides the coronavirus—made large corporations so vulnerable in this moment.  One factor

Corporate Stocks: Moving More Money out to Shareholders Than Back in through New Equity Issuances

One justification made by proponents of stock buybacks is that the practice is an effective way for funds to flow from companies that do not “need” the cash out to shareholders, who will then invest it in companies that are issuing new shares to finance firm activity. Does this explanation show up in the data?1

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Making the Case: How Ending Walmart’s Stock Buyback Program Would Help to Fix Our High-Profit, Low-Wage Economy

The rules that shape corporate America incentivize behavior that has led to the economic puzzle we see today: high corporate profits coupled with low and stagnant wages. “Shareholder primacy” is the practice in which corporations prioritize shareholder payouts over productive investment and employee compensation. This way of operating dominates corporate decision-making today, so employees have

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Albany Failed to Act on Buybacks in the Budget, but New York Has a Second Bite at the Apple

Stock buybacks are having their day in the news—and state policymakers have the ability to end the dominance of this “shareholder first” behavior. Businesses have seen a massive tax cut as a result of the GOP tax law, but the jobs promised with the Tax Cuts and Job Act have yet to materialize. Instead, companies

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Daily Digest – July 8: Will the Stock Market Boom Be a Bust for the Economy?

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest. Stiglitz: I’m ‘very uncomfortable’ with current stock levels (CNBC) Roosevelt Institute Chief Economist Joseph Stiglitz emphasizes the difference between a strong stock market and overall economic strength, reports Antonia Matthews. Roosevelt Take: William Lazonick looks at the link between the

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Taking Stock: Why Executive Pay Results in an Unstable and Inequitable Economy

Over the past three decades, U.S. executive pay has exploded. In 2012, the 500 highest paid executives in Standard and Poor’s ExecuComp database (drawn from company proxy statements) averaged $30.3 million in total compensation, with 42 percent from stock options and 41 percent from stock awards. This amount of compensation is almost three times the

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Occupy Wall Street’s Outrage at Greed Can Expand to Corporate Stock Manipulation

Rather than invest profits in building a strong economy, corporate execs invest in their own pay. Occupy Wall Street is keeping our focus on the insatiable greed and undemocratic influence of those who run our major financial institutions. But the quest for personal wealth and political power by the top executives of U.S. business corporations

What Drives the Stock Market: Innovation, Speculation, or Manipulation?

In the latest installment of his “Breaking Through the Jobless Recovery” series, economist William Lazonick exposes the financial engineering that’s far more in style than good old fashioned products. During the 1980s and 1990s, Americans fell in love with the stock market. The “go-go years” of the 1960s had produced decent stock yields. But households still