Sens. Booker, Casey and Rep. Kennedy Introduce Bicameral Bill Aimed at Corporate Short-termism, Stock Buybacks
Under Worker Dividend Act, companies that use profits to buy back stocks must also allocate a portion to raising wages for workersSeptember 19, 2019
WASHINGTON, D.C. — U.S. Senators Cory Booker (D-NJ), Bob Casey (D-PA), and Rep. Joe Kennedy III (D-MA), today reintroduced the Worker Dividend Act—legislation targeting the increasing trend of corporations using profits for stock buybacks, instead of using them to raise wages for workers. Under the bill, if a publicly-traded company buys back its stocks to enrich its shareholders and CEO, it must also pay out a commensurate sum to all of its employees—the “worker dividend.”
“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,” Senator 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 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,” Senator Casey said. “Before the 2017 tax bill was signed, the Senate voted on an amendment I authored which required corporations getting a tax cut increase worker wages at the same rate they increase payouts to their executives and stockholders. Not one Republican supported it. 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.”
“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 Senator Booker’s leadership, we can pass the Worker Dividend Act and rebalance the economic scales in this country,” Rep. Kennedy said.
Between 2003 and 2012 companies on the S&P 500 dedicated 91 percent of their total earnings to stock buybacks and corporate dividends, leaving just nine percent for things like raises for workers and other workforce investments. In the wake of the GOP tax bill, stock buybacks surged to record highs of $1 trillion in 2018, while workers across the country faced wage stagnation. The trend of corporate short-termism is a contributing factor to wealth inequality that does long-term harm to economic growth. Stock buybacks are continuing to still outpace worker bonuses and raises – more than $465 billion in stock buybacks have been announced so far in 2019.
Specifics of the Worker Dividend Act:
The Worker Dividend Act would apply to all publicly-traded companies with at least $250 million in U.S. earnings in a given year. The total value of a company’s obligation 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.
For example: If Company A earns $2.25 billion in U.S. profits and repurchases $500 million in shares. Its worker dividend obligation would equal $500 million (the lesser of 50 percent of profits above $250 million—or $1 billion--and the amount of buybacks). If Company A has 100,000 employees, then each worker would receive a payment of $5,000. Company B earns $5.25 billion in U.S. profits and does not repurchase any shares. Its worker dividend obligation would be $0 (the lesser of $5 billion and $0).
Background on Booker’s work in the Senate fighting for economic justice:
Booker has been a leading voice in the Senate for economic justice, introducing bold proposals to crack down on monopolistic corporate practices that hurt consumers and workers. He was one of the first lawmakers to press antitrust regulators on corporate concentration and the increasing trend of "monopsony" power, which limits worker mobility and depresses wages, and earlier this year he reintroduced a bill to place an immediate and indefinite moratorium on acquisitions and mergers in the food and agriculture sector.
Booker is also the author of legislation to end collusive "no poaching" clauses that are often used by large franchisors to prohibit franchisees from hiring each other’s workers (the End Employer Collusion Act). In large part due to the proposed legislation leading to increased awareness around the issue, several fast-food chains have announced plans to end such clauses.
Booker has introduced legislation to combat wealth inequality and increasing corporate concentration. He is the author of “baby bonds” legislation, which would address the wealth gap by creating a seed savings account for every American child when they are born. He also authored legislation that would provide low-income renters a tax credit to help them pay rent. In 2017, he introduced a bill targeting companies that outsource much of their labor costs to contractors and temp workers rather than hiring direct employees.