Report: U.S. Corporations Splurge on Stock Buybacks While Worker Wages Stagnate

It’s about priorities: McDonald’s could pay its 1.9 million workers $4K more per year with money it spent on buybacks

NEW YORK, NY – At a time when highly profitable corporations, especially in lower-paying sectors like fast food and retail, are facing demands to improve worker pay, a new report finds that U.S. corporations spent most of their profits—nearly 60 percent between 2015 and 2017—on stock buybacks instead. Buybacks boost share prices and create a windfall for executives and speculators but leave little to invest in workers’ wages and future growth.

Curbing Stock Buybacks: A Crucial Step to Raising Worker Pay and Reducing Inequality finds that McDonald’s could pay all of its 1.9 million workers almost $4,000 more per year with the money it spent on stock buybacks; Starbucks could deliver a $7,000 raise to workers with what it spent on buybacks; and Home Depot, Lowe’s, and CVS could give raises to every worker of at least $18,000 a year.

Buybacks are only becoming more pervasive since the Trump GOP tax cuts were enacted in December 2017. In the first quarter of 2018, S&P 500 companies completed a record $187.2 billion in buybacks, according to S&P Dow Jones indices.

“Corporate America’s addiction to stock buybacks is a sign of our times and a problem for us all,” said Katy Milani, Program Director at the Roosevelt Institute and co-author of the report. “Instead of investing in the long-term health of their companies and workforces, short-sighted executives are binging on buybacks, sometimes even spending money they don’t have on hand to buy their own shares. While they grow richer, our broader economy grows weaker—working people pay the price. We need to rewrite the rules around stock buybacks if we are to have any hope of getting the crisis of wage stagnation and spiraling wealth inequality under control.”

“Our report calls into question the idea that corporations can’t afford to pay their workers better,” said Irene Tung, Senior Researcher with the National Employment Law Project and co-author of the report. “Too many working Americans are struggling economically and are unable to make ends meet. Nine years have passed since the end of the Great Recession, and while profits have soared, wages for most workers have barely risen. Corporate employers, especially in lower-paying industries, could invest in their workers by paying them more, but that’s not been their priority.”

Buybacks, defined as the practice of corporations repurchasing their own stocks, often mean a windfall for stock-compensated executives and short-term speculators who take advantage of the higher share prices that such activity can generate. But funds allocated toward buybacks cannot be invested elsewhere, including on worker wages.

This trend of spending on stock buybacks has accelerated dramatically in recent decades, with broader economic inequality and wage stagnation growing along with it. These dynamics have been especially harmful to women and people of color, who are disproportionately employed in the sorts of low-wage industries featured in this report.

This report, which draws on wage and stock buybacks data from U.S. restaurant, retail, and food manufacturing industries, focuses on how workers would benefit if corporations instead invested in raises for their workers. For example:

  • Home Depot, which spent $21,880,000,000 on buybacks from 2015-2017, could give each of its workers an additional $18,172 per year on average.
  • McDonald’s, which spent $21,960,159,000 on buybacks from 2015-2017, could give each of its workers an additional $4,000 in annual compensation.
  • Archer Daniels Midland (ADM), which spent $3,790,000,000 on buybacks from 2015-2017, could give each of its workers an additional $39,727 in annual compensation.

As stock buybacks have surged in recent years, and have accelerated even more following the passage of the GOP tax law, the Roosevelt Institute and NELP have contributed significantly to the growing body of research on why these trends are bad for the economy. The Roosevelt Institute’s research on this topic has been featured in key news outlets, including Vox, Boston Review, and The American Prospect.

Curbing Stock Buybacks: A Crucial Step to Raising Worker Pay and Reducing Inequality

About NELP
The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. In partnership with grassroots and national allies, NELP promotes policies to create good jobs, enforce hard-won workplace rights, and help unemployed workers regain their economic footing. For more about NELP, please visit

About the Roosevelt Institute
Until the rules work for every American, they’re not working. The Roosevelt Institute asks: what does a better society look like? Armed with a bold vision for the future, we push the economic and social debate forward. We believe that those at the top hold too much power and wealth, and that our economy will be stronger when that changes. Ultimately, we want our work to move the country toward a new economic and political system: one built by many for the good of all.

It takes all of us to rewrite the rules. From emerging leaders to Nobel laureate economists, we’ve built a network of thousands. At Roosevelt, we make influencers more thoughtful and thinkers more influential. We also celebrate—and are inspired by—those whose work embodies the values of both Franklin and Eleanor Roosevelt and carries their vision forward today.


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