Large corporations paying their employees the lowest wages among their peers have spent half a trillion dollars on stock buybacks over the past five years as inflation and corporate profits have soared, a new report finds.
The Institute for Policy Studies (IPS) found in a report published Thursday that, between 2019 and 2023, the 100 companies in the S&P 500 that pay workers the lowest median wage spent a whopping $522 billion on stock buybacks — spending that inflates their stock value and directly enriches their wealthy shareholders and company executives.
Lowe’s spent the most on stock buybacks of this group, shelling out nearly $43 billion on buyback programs while paying a median salary of $32,626. Meanwhile, Lowe paid its CEO a compensation of $18 million. Home Depot was the second largest spender on buybacks of low-wage companies, spending $37 billion on such programs while its workers had a median pay of only $35,131 — far lower than the average living wage across the U.S. and approaching poverty wages in some places.
This is spending that could have been pushed into employee salaries and benefits, or even investments in the business like capital expenditures, the report points out, but that was instead spent on enriching executives.
Walmart, for instance, spent nearly five times the amount they’ve contributed to employee 401(k) plans on stock buybacks — $31 billion. The median worker at Walmart made $27,642 in 2023, while its CEO was paid $27 million, nearly 1,000 times the company’s median wage.
As corporations have gouged prices in recent years, taking advantage of economic instability to drastically raise costs, stock buyback programs have hit record highs and so far show no sign of stopping. Analysts have said that the amount spent on buybacks by U.S. corporations could hit $1 trillion annually as companies shower wealthy investors with cash — while, not by coincidence, wealth inequality also hits record highs.
Stock buyback programs were outlawed decades ago, but were revived by the Ronald Reagan administration. The GOP’s major tax overhaul in 2017, led by Donald Trump, has given companies fuel to even further pursue stock buybacks, freeing up hundreds of billions that would have otherwise been taxed.
“The massive corporate tax cut in the 2017 GOP tax reform led to an explosion of stock buybacks, a financial scam that artificially inflates the value of CEO stock-based pay. This wasteful practice is particularly obscene when the companies are paying poverty wages,” said report author Sarah Anderson. “We found that the country’s 100 largest low-wage corporations have blown over half a trillion dollars on buybacks to pump up CEO pay while many of their workers were struggling to put food on the table.”
The gulf between executive and worker pay is massive. In 2023, the ratio of CEO to worker pay at the lowest paying firms was a stunning 538 to 1 — with CEO pay at an average of $14.7 million and worker pay at an average of $34,522, the report found. The worst offender last year was Ross, the report found, with its CEO paid 2,100 times the company’s median worker pay: $18.1 million to $8,618.
IPS suggests that lawmakers seeking to rein in stock buybacks could, among other things, expand restrictions and taxes on stock buyback programs.
“At a time when our country is deeply divided on so many issues, Americans have enormous common ground on the problems of extreme CEO-worker pay gaps,” said Anderson. “Poll after poll shows that Americans across the political spectrum are fed up with overpaid CEOs and want lawmakers to take action.”
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