Like Countable?

Install the App
TRY NOW

senate Bill S. 2514

Should Companies Using Profits for Stock Buybacks Pay Their Employees a ‘Worker Dividend’?

Argument in favor

While stock buybacks benefit companies’ valuations, shareholders, and executives, they don’t necessarily benefit the employees who create value for the companies which is fundamentally unfair. Companies should pay employees a worker dividend to ensure that workers share in their employers’ profits.

JamieD's Opinion
···
10/02/2019
Yea. I’m done with companies paying their employees so little that they can’t support their families on a full-time income or they have to use government assistance.
Like (62)
Follow
Share
burrkitty's Opinion
···
10/02/2019
Whatever. Can’t we just raise the minimum wage? FFS.
Like (35)
Follow
Share
Michael's Opinion
···
10/02/2019
This practice was illegal up until the 80’s. The buyback only benefits the shareholders & CEO, not the people who made it possible
Like (28)
Follow
Share

Argument opposed

Stock buybacks are a healthy part of financial markets that benefit investors, including the more than 50% of Americans who directly or indirectly own stock. That money can then be reinvested or used to start businesses or purchase goods and services — all of which boost the economy.

jimK's Opinion
···
10/02/2019
There is a conundrum between what was promised by the tax cuts granted to the wealthiest and to Corporations and the way those ‘cuts’ are being used by Corporations. That is due to the people who sold the public on the need for these cuts and the promises that it would bring better paying jobs. That is on the government and the people who supported these cuts- not on corporations. In general, I feel that the tax cuts for corporations are needed to ensure that they are generally consistent to the rates they would pay in other countries. It will have the long-term effect of bringing back manufacturing and corporate investment in valuable US manufacturing infrastructure. Given the daily uncertainty of what our governmental policies are or will be, the safest use of corporate capital is in the reinvestment of buying back stock to keep shareholders happy and to keep 401K retirement plans growing. We do need to disentangle personal wealth from corporate wealth and drastically increase taxes on the wealthiest. We need to close the legal tax loopholes that enable Amazon to pay no taxes or for trump resort properties to claim farm credits (since they maintain a couple goats in the far extents). trumps daily inconsistent and unpredictable governance by tweet makes it hard for corporations to see returns on the longer-term investments needed to assure that all employees are treated as valued stakeholders. In general, corporations need employees but don’t make them part of the process and employees need corporations but do not know a lot about the laws, restrictions, pressures from shareholders that drive other costs. There needs to be attempts to close the gaps and getting both sides to a common understanding and working together. Some companies do this and their success should be a model.
Like (40)
Follow
Share
Lane's Opinion
···
10/02/2019
Once you take the rose colored lenses off, you realize this is socialism. This is government deciding who gets what and destroying free market. No. We want kess government not more.
Like (17)
Follow
Share
Anthony's Opinion
···
10/02/2019
No ! This is typical Leftist thinking taught at some Ivy League schools.There is nothing unfair about stock buy backs. Stock holders are owners who invest capital and take risks including the loss of their entire investment.of losing their investment.Workers do not. Government micro managing businesses is at best,inconsistent with Founding Principles,and at worst,unconstitutional. In the USA, American workers are free to develop and market their skills and labor at a price they determine meets their individual requirements. Business owners are free to take and share business risks and compete in free markets for workers. This is the nature of America’s extraordinary success that results from the individual freedoms and rule of law provided in the Constitution and free market capitalism. Unfortunately,Cory Booker,as a child of privilege,doesn’t understand the fundamental nature and source of his,and our nation’s good fortune.
Like (16)
Follow
Share

bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Finance
    IntroducedSeptember 19th, 2019

What is Senate Bill S. 2514?

This bill — the Worker Dividend Act of 2019 — would require publicly traded companies with at least $250 million in annual earnings to pay employees a worker dividend if they use profits for stock buybacks instead of raising workers’ wages.  The worker dividend would total at least the lesser of either the amount it paid to repurchase securities on the open market during the taxable year or 50% of the amount by which its U.S. earnings before interest, taxes, depreciation, and amortization exceeded $250 million. Employers who fail to pay a required worker dividend would be subject to a tax equal to the required dividend. 

This bill would also specify that the dividend should be distributed equally to employees and be paid in addition to compensation that the employer would ordinarily pay to employees.

Impact

Employees of publicly traded companies making at least $250 million a year; stockholders of public companies; publicly traded companies; stock buybacks by publicly traded companies making at least $250 million a year; and worker dividends for employees of publicly companies using revenue for stock buybacks.

Cost of Senate Bill S. 2514

A CBO cost estimate is unavailable.

More Information

In-DepthSen. Cory Booker (D-NJ) reintroduced this bill from the 115th Congress to require companies that use profits for stock buybacks instead of raising workers’ wages to pay out a commensurate sum to all of its employees in the form of a “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. 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.” 

Original cosponsor Sen. Bob Casey (D-PA) adds that, in contrast to the 2017 GOP tax bill, this bill puts workers first

“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. 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.”

House sponsor Rep. Joe Kennedy III (D-MA), who advocates “moral capitalism,” says

“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.”

The Business Roundtable opposes this legislation. It argues that buybacks contribute to millions of Americans’ retirement security, and that federal mandates on how companies spend their profits would stifle growth. Similarly, a U.S. Chamber of Commerce executive says that limitations on stock buybacks would hurt “Mr. and Mrs. 401(k), . . . the primary beneficiaries of stock buybacks in the past.”

More generally, supporters of buybacks contend that when companies give money back to shareholders, many of the beneficiaries are ordinary people (over 50% of American families own stock, directly or indirectly). Moreover, they argue that the profit that investors gain from buybacks can be reinvested in entrepreneurship or new stocks or spent on goods and services; all of which benefits the economy. 

Treasury Secretary Steve Mnuchin cited these arguments at a Chamber of Commerce event in late February 2018. He said, “Even if people buy back stock, that is money that goes back into the economy that lets investors take that money and allocate it to other things. It’s a complete system.”

This legislation has one Senate cosponsor, Sen. Bob Casey (D-PA), in the 116th Congress. Its House companion is sponsored by Rep. Joe Kennedy III (D-MA). Last Congress, this legislation had one cosponsor, Sen. Casey, and didn’t receive a committee vote.


Of NoteFrom 2003 to 2012, companies on the S&P 500 spent 91% of their total earnings on stock buybacks and corporate dividends. This left only 9% of these companies’ earnings for workers’ raises and other workforce investments. Corporate boards, often driven by activist investors, spend a significant amount of their profits buying back their own stock and issuing dividends — resources that detractors argue would be better suited to long-term investments in workers, training and innovation. 

After the enactment of the Republican tax bill (aka the Tax Cuts and Jobs Act), corporations’ stock buybacks rose to a record-high $1 trillion in 2018. These buybacks overwhelmingly benefitted corporate executives and wealthy shareholders while workers’ wages stagnated. When stock buybacks reached $200 billion in 2018, the figure was over 40 times the $5 billion announced in worker bonuses and raises up to the same point last year. In 2019, stock buybacks are continuing to outpace worker bonuses and raises: as of mid-September 2019, over $465 billion in stock buybacks had been announced.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / SDI Productions)

AKA

Worker Dividend Act of 2019

Official Title

A bill to amend the Internal Revenue Code of 1986 to ensure that workers and communities that are responsible for record corporate profits benefit from the wealth that those workers and communities help to create, and for other purposes.

    Yea. I’m done with companies paying their employees so little that they can’t support their families on a full-time income or they have to use government assistance.
    Like (62)
    Follow
    Share
    There is a conundrum between what was promised by the tax cuts granted to the wealthiest and to Corporations and the way those ‘cuts’ are being used by Corporations. That is due to the people who sold the public on the need for these cuts and the promises that it would bring better paying jobs. That is on the government and the people who supported these cuts- not on corporations. In general, I feel that the tax cuts for corporations are needed to ensure that they are generally consistent to the rates they would pay in other countries. It will have the long-term effect of bringing back manufacturing and corporate investment in valuable US manufacturing infrastructure. Given the daily uncertainty of what our governmental policies are or will be, the safest use of corporate capital is in the reinvestment of buying back stock to keep shareholders happy and to keep 401K retirement plans growing. We do need to disentangle personal wealth from corporate wealth and drastically increase taxes on the wealthiest. We need to close the legal tax loopholes that enable Amazon to pay no taxes or for trump resort properties to claim farm credits (since they maintain a couple goats in the far extents). trumps daily inconsistent and unpredictable governance by tweet makes it hard for corporations to see returns on the longer-term investments needed to assure that all employees are treated as valued stakeholders. In general, corporations need employees but don’t make them part of the process and employees need corporations but do not know a lot about the laws, restrictions, pressures from shareholders that drive other costs. There needs to be attempts to close the gaps and getting both sides to a common understanding and working together. Some companies do this and their success should be a model.
    Like (40)
    Follow
    Share
    Whatever. Can’t we just raise the minimum wage? FFS.
    Like (35)
    Follow
    Share
    This practice was illegal up until the 80’s. The buyback only benefits the shareholders & CEO, not the people who made it possible
    Like (28)
    Follow
    Share
    This is a better use of money instead of attempting to control stock prices. Employees across America has not had a decent pay raise in thirty years.
    Like (26)
    Follow
    Share
    Sure, but also tax the stock market accordingly to begin with, and give workers more power to own their own labors output.
    Like (18)
    Follow
    Share
    Once you take the rose colored lenses off, you realize this is socialism. This is government deciding who gets what and destroying free market. No. We want kess government not more.
    Like (17)
    Follow
    Share
    No ! This is typical Leftist thinking taught at some Ivy League schools.There is nothing unfair about stock buy backs. Stock holders are owners who invest capital and take risks including the loss of their entire investment.of losing their investment.Workers do not. Government micro managing businesses is at best,inconsistent with Founding Principles,and at worst,unconstitutional. In the USA, American workers are free to develop and market their skills and labor at a price they determine meets their individual requirements. Business owners are free to take and share business risks and compete in free markets for workers. This is the nature of America’s extraordinary success that results from the individual freedoms and rule of law provided in the Constitution and free market capitalism. Unfortunately,Cory Booker,as a child of privilege,doesn’t understand the fundamental nature and source of his,and our nation’s good fortune.
    Like (16)
    Follow
    Share
    They should be paying their workers livable wages, however most make their profit margins by offering low wages, no benefits, part-time/contractor status. Meanwhile, the company & elite management make money hand over fist. When the company does well, off the backs of its workers, rarely do the workers get any benefit. This law would be a beginning to right this situation & alleviate taxpayer funded welfare we provide to many of our nation’s workers.
    Like (10)
    Follow
    Share
    Easy No on this. Sometimes the worst things in human history come with evil hiding behind good intentions... Less government.
    Like (9)
    Follow
    Share
    It is not a free market if the government suddenly can decide how and what a company can spend its money on. Were would it end?
    Like (8)
    Follow
    Share
    Get that idiot Cory Booker and government out of our business.
    Like (7)
    Follow
    Share
    That’s up to each company to decide.
    Like (7)
    Follow
    Share
    If you want a dividend from a business then invest your money in that business. If you want a paycheck from a business then work for that business. If you want to direct where a business invests its money then work your way up the executive ladder.
    Like (7)
    Follow
    Share
    Actually workers should be buying stock in the company that they are working for!
    Like (6)
    Follow
    Share
    This is a great first step to helping income inequality. Those of us who actually work for a living are being daily exploited by the companies who are getting rich from our labor.
    Like
    Follow
    Share
    Sponsor is Corey Booker, and he is a partisan hack. Would not trust him to walk a liberal dog.
    Like (5)
    Follow
    Share
    Should people who get a raise be forced to share with their cousins?
    Like (5)
    Follow
    Share
    How about you leave it up to the company!? It’s their business and their decision to make with their employees. The federal government doesn’t need to be telling companies what to do with their money especially when our elected officials can’t even spend our money responsibly.
    Like (4)
    Follow
    Share
    This is unconstitutional. Nowhere in the constitution do federal government bureaucrats get to dictate to private business what to do with their money. Actually the constitution was written to protect us from such an abusive government.
    Like (4)
    Follow
    Share
    MORE