Abigail Disney testified in support of a California state senate bill to tax large CEO-worker pay gaps before the committee voted to advance the proposal.
Corporations Should Share the Wealth Before Buying Back Stock
Senator Sanders has introduced a bill that would ban Walmart and other big corporations from repurchasing their stock unless they narrow the gaps between CEO and worker pay.
Blogging Our Great Divide
November 15, 2018
These are good times for those at the top of the Walmart empire. Family members of the founders have seen their wealth grow about 10,000% since the 1980s. Today the Waltons are worth about $180 billion. And they own so much Walmart stock that four of them made $12.7 billion in just one day last year after a profit report bumped up their share price.
For Walmart CEO Doug McMillon, those strong profits turned into a $22 million paycheck.
But those at the top of the Walmart empire are not sharing the wealth. The CEO’s pay was 1,188 times as much as the pay for a typical Walmart employee.
And even after the Republican tax “reform” that was supposed to be so great for workers, Walmart still refuses to pay a living wage. Instead, those tax cuts are making already rich CEOs and shareholders even richer.
How is this happening? Walmart and other big U.S. corporations are using huge chunks of their tax windfalls to buy back their own stock.
These buybacks have no redeeming social value. They simply artificially inflate a company’s share price. That helps the rich who own the vast bulk of stock. At Walmart, the Walton family owns about half.
Buybacks also boost executive pay, since most of it is based on stock.
In other words, whenever companies go on a buyback spree, the rich just get richer.
Walmart announced plans in 2017 to spend $20 billion on stock buybacks over a two-year period. What if they spent some of those billions instead on worker pay? Berkeley researchers estimate it would cost Walmart less than $5 billion a year to raise its minimum wage to $15 an hour.
We should consider banning stock buybacks altogether, like they were until 1982. In the meantime, we should make sure companies can only repurchase their stock if they’re sharing the wealth. This would be good for workers, good for business, and good for the broader economy.
Inequality.org co-editor Sarah Anderson calling for a ban on stock buybacks for companies that refuse to share the wealth.
On November 15, Senator Bernie Sanders of Vermont and Rep. Ro Khanna of California introduced a bill that would do just that. Taunting the world’s largest big box retailer, they called their bill the “Stop Welfare for Any Large Monopoly Amassing Revenue from Taxpayers Act” (Stop Walmart Act).
Specifically, the bill would prohibit large employers from buying back stock unless they:
- Pay all employees at least $15 an hour (Walmart’s base wage is just $11);
- Allow employees to earn up to 7 days of paid sick leave; and
- Ensure that CEO compensation is not more than 150 times the company’s median worker pay.
Sanders and Khanna are hoping to build on their recent success with a bill that helped shame Amazon into raising their base wage to $15. In that case, they shined a spotlight on the fact that a large number of the giant retailer’s employees earn such low wages that they have to rely on public assistance.
The stock buyback angle is a new one for the legislators, but a hot issue at a time when so many U.S. corporations are using this legal form of stock manipulation to reward shareholders. According to Americans for Tax Fairness, corporations are spending 115 times as much of their tax windfalls on buybacks as on worker bonuses and raises.
How will Walmart respond to the public scrutiny generated by the Sanders-Khanna legislation? It’s too early to tell. But with millions of consumers about to decide where to spend their holiday dollars, the timing could not be better.