WASHINGTON—When it comes to deciding where to put their money, 100 of the nation’s richest corporations have pretty blatant priorities: Billions for stock buybacks for corporate honchos and Wall Street financiers. Pennies for workers’ pay.
And a hunk of that buyback cash, via federal contracts, mostly from the military, comes from taxpayers’ pockets, too.
So says the Institute for Policy Studies in their Executive Excess report, posted on the think-tank’s website. IPS ranks the top 100 Standard & Poors corporate list by amount spent on buybacks, which shovel dollars into pooh-bahs’ pockets and to crooked capitalists. The grand total for all 100 starting in fiscal 2020: $341.2 billion.
Over that same time period, half of the low-pay group ate at the government trough. They garnered $24.1 billion in taxpayer dollars, in federal contracts, with most of the money from the military. And that figure may be low.
It’s also skewed by one big pact: The Pentagon is paying Amazon alone $10,403,985,746 for cloud computing and similar services.
The IPS report shows two key points. One is that many of the firms that stiff their workers on pay also dole out millions to their CEOs and stockholders. The Teamsters used that key comparison in their recent successful campaign for a new contract from UPS. The Auto Workers are sounding the same theme in their talks with the Detroit carmakers (see auto contract story).
And Executive Excess re-emphasizes the corruption of the corporate class.
Congruence no coincidence
The congruence between stock buybacks for corporate poohbahs and skimpy wages for their workers is no coincidence. It’s been a trend for decades. Corporate boards are stacked with sycophants—or other corporate executives, who scratch each other’s backs financially.
You-OK-my-high-pay-and-I’ll-make-sure-your-firm-gets-that-fat-services-contract tradeoffs. All of it perfectly legal under incorporation laws in lax states which charter firms.
Those same boards, of course, turn a blind eye at best to the worker repression and exploitation practiced by Jeff Bezos of Amazon, Howard Schultz of Starbucks and their ilk. Or board members gleefully encourage it. Pay the workers less and their stock buybacks are worth more.
So it’s no coincidence that even though it officially gets no federal cash, Walmart, which is notorious for its low pay, was third highest on the buyback list—and for years held the record for breaking labor law, too.
But Walmart’s been overtaken by Amazon and Starbucks, and both are on the list of low-pay, high-buyback firms. So is notoriously anti-union FedEx, which achieved a unique distinction: Its buyback dollars went up and so did its top honcho’s pay, while median pay of its workers went down.
“FedEx CEO Frederick Smith has the largest stockpile in the Low-Wage 100, with his stock growing by 65% to more than $5 billion since January 2000,” Executive Excess reports. “By contrast, FedEx median worker pay fell by 20% to $39,177 (including $9,267 in health benefits) between 2019 and 2022.”
A lot of FedEx’s buyback money came from the feds, too. It finished second to Amazon in U.S. government contracts, at $6.2 billion, mostly for delivering medicines to VA hospitals and clinics.
Half of the top 100 Standard & Poors corporations that low-ball their workers got federal pacts. And some obviously which sell to the feds—such as Walmart, McDonald’s, and Lowe’s—but not in specific contracts with the military, main source of federal gelt, aren’t in that multibillion dollar figure.
But Lowe’s—yes, the home improvements chain–is first ($34.95 billion) and Walmart is third ($23.86 billion) in shoveling money into their corporate titans’ and Wall Street pockets via stock buybacks over the last three years.
Lowe’s CEO Marvin Ellison earned $17.47 million last year, 591 times a median Lowe’s worker’s paycheck of $29,584. Meanwhile, over the last three years, Ellison’s stock in his own shop rose by 754% to $108 million.
It’s also no coincidence that the National Labor Relations Board has cited Lowe’s, whose headquarters is in anti-union North Carolina, more than a dozen times in this century for labor law-breaking, although that detail is not in the IPS analysis.
The latest case was two years ago, where Lowe’s defended a complete ban in its employee handbook on worker discussions about virtually anything, including pay. The NLRB said that was too broad. Lowe’s took the board to court—and lost.
Walked away with 25 million dollars
Walmart CEO C. Dillon McMillon walked away in 2022 with $25.31 million in compensation. The firm spent $23.86 billion in three years on buybacks. The median pay for a Walmart worker, the point where half of its “associates” are above and half below, was 1% of McMillon’s ($27,136). He owns $285 million in stock.
Then there’s Amazon, which is in a class by itself in two categories. One is the value of its federal contracts, thanks to the Pentagon. The other is union-busting, where the Economic Policy Institute reported it led the league in that spending last year. All thanks to the rabid anti-worker policies of founder and chief shareholder Jeffrey Bezos and his successor as CEO, Andre Jassy.
Jassy didn’t take a big salary last year, after succeeding Bezos in the CEO’s chair. But Jassy’s stock from buybacks from 2021, in options he began cashing in last year and will continue to cash for a decade, are worth $212 million out of a corporate total of $5.911 billion in buybacks over the last three years. The median Amazon worker earned $34,195 last year.
In a mild surprise, Schultz’s Starbucks did not finish dead last in median employee pay, Executive Excess reports. Nor did Walmart or McDonald’s, which was third from last. None of the three were listed in the last three years as gaining federal contract dollars. That’s even with McDonald’s franchises at military bases nationally and even in the Pentagon basement.
The dishonor of lowest worker pay among the top corporations went to Aptiv, an Ireland-based auto tech supplier founded in 1994 in Troy, Mich. Aptiv paid its workers a median yearly wage of $8,139. It also got more than $20.2 million in federal contracts, and paid CEO Kevin Clark $16.21 million while shelling out $127 million for stock buybacks.
In so many words, you could even say U.S. taxpayers paid Clark.
There are solutions to this corporate greed, says report author Sarah Anderson. The top one is to increase taxes on the honchos’ big pay and a 1% excise tax on stock buybacks. The flip side is that firms that forgo lining Wall Street’s and pooh-bahs’ pockets should get subsidy preferences for buying U.S.-made semiconductors.
Democratic President Joe Biden proposed a minimum 15% tax on high corporate pay, but he was forced to kill it in bargaining earlier this year with House Speaker Kevin McCarthy, R-Calif., over the debt limit hike-budget cut package.
And several progressive unions and organizations, such as the Patriotic Millionaires, also support the excise tax on stock buybacks.
“These are serious responses to public outrage over today’s extreme CEO-worker pay gaps,” says Anderson, who directs the IPS Global Economy Project and co-edits its Inequality.org website.
“Policymakers could do much more to narrow the divides—including through executive action. President Biden should wield the power of the public purse to push all corporate recipients of tax-payer money to narrow their pay gaps, stop wasting money on buybacks, and respect worker rights.”
The entire report is on the IPS website at https://ips-dc.org/report-executive-excess-2023/
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