A bill recently introduced in Congress would require publicly-traded companies to pay out a “worker dividend” if it does a stock buyback.
The stock buyback is an increasing trend among corporations. They use the profits from stock buybacks to enrich shareholders, but the bill’s authors say they should also be used to raise wages for workers. The bill – introduced by Rep. Joe Kennedy (D-MA and Sens. Cory Booker (D-NJ and Bob Casey (D-PA) – said the if companies do a buyback, they must pay out a commensurate sum to all of its employees — a “worker dividend.”
“A broken economic system that rewards corporate profits at the expense of working people only widens the inequality plaguing every corner of this nation. Any company showering shareholders with buybacks should be legally obligated to share their wealth with the workers who generate it. With the leadership of Senator Booker and Senator Casey, we can pass the Worker Dividend Act and rebalance the economic scales in this country,” Kennedy said.
Companies on the S&P 500 dedicated 91 percent of their total earnings to stock buybacks and corporate dividends between 2003 and 2012, the lawmakers said. That left just nine percent for raises for workers and other workforce investments. Following the 2017 Tax Cuts and Jobs Act, stock buybacks surged to record highs of $1 trillion in 2018. So far in 2019, more than $465 billion in stock buybacks have been announced. Stock buybacks continue to outpace worker bonuses and raises.
“While corporate profits are at their highest level in 90 years, wages for working families have been stagnant for more than four decades, and workers’ slice of the pie continues to shrink. A company that has the profits to reward its shareholders should also reward the employees who are helping create those profits,” Booker said. “This legislation has a simple premise: when companies do well, workers should do well. There’s no reason that a country as rich and as powerful as ours should have to choose between great wealth for the few, like corporate executives and shareholders, and great opportunity for all of its citizens, including its workers.”
The Worker Dividend Act would apply to all publicly-traded companies with at least $250 million in earnings. The “worker dividend” would be calculated as the lesser between the total amount of that year’s stock buybacks and 50 percent of the company’s profits above $250 million. That total obligation would then be distributed equally to each of the company’s employees.
“The 2017 GOP tax bill is just another tale of how the rich get richer. This law was sold to American workers as a ‘middle-class miracle,’ and yet it was actually a huge giveaway to large corporations who used their tax cut to engage in unprecedented corporate stock buybacks,” Casey said. “I am happy to join Senator Booker in our continued effort to put America’s workers first. I hope my Republican colleagues will join us.”
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