The advocacy letter also urges the administration to use the power of the public purse to discourage wasteful corporate spending on stock buybacks. This previously illegal financial maneuver artificially inflates the value of CEO stock-based pay while doing nothing for workers.
Studies indicate that buybacks are also associated with reduced investment and innovation. One tragic case in point: Abbott, a federal contract recipient now notorious for contaminated baby formula, spent billions on stock buybacks while neglecting to make necessary upgrades to safety equipment.
President Biden is clearly not a fan of Corporate America’s rampant spending on buybacks, which is expected to hit a historic high of $1.1 trillion this year. He supports legislation to tax such expenditures, and his administration recently announced a plan to give priority in awarding new semiconductor manufacturing subsidies to firms that agree to forgo buybacks. That policy should be extended to all corporate recipients of federal contracts and subsidies.
Finally, the letter commends Biden’s executive order requiring big construction contractors to sign project labor agreements with their workers and urges him to extend that condition to all major contractors, along with a mandate to remain neutral in union organizing drives.
In recent years we’ve seen a rash of anti-union actions, including by major contractors like Amazon and Maximus, despite considerable evidence that unionization improves productivity. Empowering workers also tends to have a moderating effect on executive compensation.
“In other countries that have significantly higher unionization rates than the United States, such as Canada, the UK, and Sweden,” the letter notes, “average CEO pay is much lower.”
These three demands complement other calls for pro-worker procurement reforms, such as proposals to expand family and paid sick leave for contract employees. The basic principle here: U.S. taxpayers should not have to fund corporate practices that undermine their own economic security.
President Biden has often said he wants to be the most pro-labor president in U.S. history. He shouldn’t hesitate to use all the tools in his executive action toolbox to make that goal a reality.