In a joint publication of the National Employment Law Project (NELP) and the Roosevelt Institute, Irene Tung and Katy Milani expose the extent of stock buyback spending across the U.S. economy from 2015 to 2017—finding that companies spent almost 60 percent of net profits on buybacks. At a time of growing economic inequality, with millions of workers in low-wage industries struggling to make ends meet, that is money that corporations could instead use to improve worker pay.

Curbing Stock Buybacks: A Crucial Step to Raising Worker Pay and Reducing Inequality is a crucial addition to any effort to address today’s high-profit, low-wage economy, in which corporate executives and shareholders extract value from corporations rather than creating a cycle of continuous productivity growth, through which workers, consumers, and the economy at large benefit.

One of the primary strategies used to extract profits up and out of companies is the stock buyback—a practice in which corporations repurchase their own stocks from the open market to artificially drive up share prices. Stock buybacks greatly benefit corporate executives, but they leave companies with fewer resources available to invest in workers, business expansion, and long-term economic growth.

By highlighting three core industries—restaurant, retail, and food manufacturing, in which millions of our nation’s workers struggle to make ends meet in low-wage, economically insecure jobs—Tung and Milani demonstrate how workers, and thus the economy at large, could benefit if CEOs chose to redirect money spent on stock buybacks toward worker compensation.

This scale of per-worker spending on buybacks calls into question the idea that corporations cannot afford to pay their workers more. Policy reforms to curb the use of stock buybacks, are a crucial step towards reducing the growing pay disparities between workers and executives and addressing increasing economic and racial inequality. While ending buybacks alone will not ensure that workers get their fair share of corporate profits, it would close one major channel through which billions of dollars are currently siphoned from America’s public companies and lay the foundation for more sustainable and shared prosperity for all.

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