As I highlighted in previous posts, Stock Buybacks after the Trump Tax Cuts have supercharged the vacuum that is sucking profits from the worker and society while neglecting to make investments in assets that I classify as “public goods”. A Senator from Ohio, Sherrod Brown, did a pretty ingenious thing. He built a calculator that can tell you what a worker’s dividend would be if Public Corporations paid a $1.00 to non-executive employees for every $1 Million in stock buybacks. According to Brown, U.S. companies spent a record $806 billion on stock buybacks in 2018, a 55% increase over 2017, and a 36% increase over 2007 (previous record year). In 1989, CEO to worker compensation was 58 to 1, and in 2017 it had grown to 312 to 1. During this time the share of wealth held by the bottom 90% dropped from 33% to 23%. This is further evidence of that vacuum at work.
Top Ten List (Based on Brown’s Calculator as of 2018):
| Company | Value of Stock Buyback | Amount of Workers Dividend |
| Apple Inc. | $72,738,000,000 | $72,730.00 |
| Qualcomm Inc | $22,580,000,000 | $22,580.00 |
| Wells Fargo & Company | $20,633,000,000 | $20,633.00 |
| Bank of America | $20,094,000,000 | $20,094.00 |
| JP Morgan Chase | $19,983,000,000 | $19,983.00 |
| Cisco Systems Inc. | $17,661,000,000 | $17,661.00 |
| Amgen Inc. | $17,900,000,000 | $17,900.00 |
| Facebook Inc. (Class A) | $12,879,000,000 | $12,879.00 |
| Citigroup Inc. | $14,433,000,000 | $14,433.00 |
| Pfizer Inc. | $12,198,000,000 | $12,198.00 |
Prior to Trickle Down economics we used to have a “stake holder” economy. There was a belief that everyone that played a part in the ecosystem had value and were rewarded for their contributions. When we began to shift our ecosystem to a mindset that held the Shareholder above everyone else, we started to pervert the capitalist system that has served us well. Yes, we have booms and busts, have undervalued the contributions of those that were/are marginalized in our society and culture, but the pedestal that we have erected to prop up the Shareholder and CEO does not help us address those problems, nor does it allow us to grow a “stake-holder economy” where we all can contribute and win. The Worker Dividend, that Senator Sherrod Brown is proposing is an attempt to correct a perversion working against us, as we all try to create an ecosystem that has more intention in making the investments in the foundations that allow our ecosystem to flourish and grow. How much economic good and growth could an extra $15,000 to $20,000 provide in a non-executive’s pocket?
What we don’t need to see is a Proposal that indexes capital gains to inflation become law or policy. Under current rules the gain for the sale of an investment (shares of stock, or real estate) is equal to how much more the item sold for then it cost to buy. Under the proposed rule, you would be able to calculate inflation into the equation, thus allowing you to shrink the spread seen between the amount used to buy the investment and the amount it sold for when filing your taxes. Capital Gains are already taxed less than ordinary income, so this lowers that bill. In 2018 the Top 20% of U.S. earners, with an average income of around $350,000, collected 90% of the taxable gains with 50% of those gains going to the Top 0.1%, who have an average income of $10.8 million. Couple this with the ability to still utilize “interest deductions”, then you have a tool that super charges that vacuum. Past Administrations have viewed this as illegal, but members of Congress and the White House are proposing such a thing be done by Executive Order, to provide cover for members of Congress that support this sort of policy.
Mull over the two idea’s above, and ask which has the best chance of fertilizing our ecosystem and putting money in the hands of the workers? I believe in Employer based Retirement Plans, prefer Pensions over 401 K’s, understand the power of “compound interest”, but ask if we believe the “shareholder” is of more value, then how are we “valuing” the worker? If we want to leverage the power of compound interest shouldn’t we leverage it as a society in a way so that every “stake holder” benefits from such a system?
Bottom line, doesn’t paying people more and putting more money into people’s retirement while at the same time decreasing the power of that vacuum; create the best pro-growth conditions for our ecosystem? People who are paid more can be empowered to realize better outcomes in education, health, and community; while local and city governments can realize the revenue to make the investments in our education, digital, and physical infrastructure? By allowing the trickle-down game to continue playing, are we just playing ourselves?
Economic Journeyman 