As corporate profits soar and inflation squeezes workers, America’s largest low-wage employers have spent over half a trillion dollars on stock buybacks since 2019, enriching executives while leaving employees behind.
Large corporations notorious for paying the lowest wages in the United States have spent over $522 billion on stock buybacks over the past five years, according to a new report by the Institute for Policy Studies (IPS). This massive expenditure has served to inflate stock values, directly enriching wealthy shareholders and executives, while millions of workers struggle to make ends meet on poverty wages.
The report reveals a stark contrast between corporate spending on buybacks and investments in workers. Instead of raising wages or improving benefits, companies have chosen to funnel their profits into stock buybacks, a practice that was once illegal but has become increasingly common following its revival during the Reagan administration and the 2017 GOP tax overhaul. This trend highlights the growing economic divide between executives and the workers who generate their profits.
Stock buybacks are a financial maneuver where a company purchases its own shares from the marketplace, reducing the number of outstanding shares and boosting the stock’s price. This practice directly benefits shareholders, particularly the executives whose compensation is often tied to stock performance. The IPS report found that the 100 companies in the S&P 500 that pay the lowest median wages spent $522 billion on buybacks from 2019 to 2023.
This spending has come at a significant cost to workers. Funds that could have been used to raise wages, enhance employee benefits, or invest in long-term business growth have instead been diverted to buybacks. Lowe’s, for example, spent $43 billion on stock buybacks during this period, a sum that could have provided each of its 285,000 employees with a $30,000 bonus every year from 2019 to 2023. Instead, the company’s median wage is just $32,626, while its CEO, Marvin Ellison, was paid $18 million in 2023.
Lowe’s is a prime example of a corporation prioritizing executive enrichment over employee welfare. Despite spending $43 billion on buybacks, the median wage for Lowe’s employees remains at $32,626—barely above poverty levels in many areas. The company also spent nearly five times more on buybacks than on capital expenditures for store improvements and technology upgrades over the past five years. This imbalance reflects a broader trend among low-wage employers who prioritize short-term gains for executives and shareholders over long-term investments and worker compensation.
Home Depot, another major offender, spent $37 billion on stock buybacks while paying a median wage of $35,131. Like Lowe’s, Home Depot’s spending on buybacks far outstrips its investment in workers or long-term business growth, despite the company’s reliance on a workforce that struggles to make a living wage.
Walmart, the nation’s largest private employer, spent $31 billion on stock buybacks over the past five years—nearly five times what it contributed to employee 401(k) plans. Walmart’s median worker wage was $27,642 in 2023, while CEO Doug McMillon received nearly $27 million, a ratio of nearly 1,000 to 1. This stark disparity exemplifies the growing income inequality in the U.S. and raises serious questions about corporate responsibility and the fair distribution of wealth.
The gulf between CEO and worker pay is widening at an alarming rate. The IPS report found that the ratio of CEO to worker pay at the lowest-paying firms was an astonishing 538 to 1 in 2023, with the average CEO making $14.7 million while the average worker earned just $34,522. The most egregious example is Ross Stores, where the CEO’s pay was 2,100 times the median worker’s salary—$18.1 million compared to $8,618.
These figures highlight a broader trend of rising wealth inequality in the United States, exacerbated by corporate practices that prioritize executive compensation over worker welfare. As stock buybacks hit record highs, wealth inequality has also reached unprecedented levels, with the richest Americans reaping the benefits while the majority of workers see little improvement in their financial security.
Public outrage over these practices is growing, and for good reason. The extreme disparity between CEO and worker pay is not just a moral issue but an economic one. When corporations focus on enriching a small elite at the expense of their workforce, they undermine long-term economic stability and contribute to the growing divide between the rich and the poor.
In response to this growing inequality, there is increasing support for policies that would rein in stock buybacks and address extreme CEO-worker pay gaps. The Democratic Party platform, for example, calls for a quadrupling of the tax on stock buybacks. Such measures would not only generate revenue but also discourage the excessive use of buybacks to inflate stock prices and executive compensation.
Historically, CEO pay was far more aligned with worker compensation. Forty years ago, the ratio of CEO to worker pay was around 40 to 1—significantly lower than today’s levels. Additionally, stock buybacks were a rare occurrence two decades ago. For example, Lowe’s spent nothing on buybacks between 2000 and 2004, a stark contrast to the $43 billion it has spent in recent years.
Policy experts and advocates are calling for a return to these more equitable practices. Proposals include expanding restrictions on buybacks, increasing taxes on excessive CEO pay, and implementing policies that ensure a fairer distribution of corporate profits.
Corporations must shift their focus from short-term gains for executives and shareholders to long-term investments in their workers and businesses. The funds currently spent on buybacks could be used to raise wages, improve employee benefits, and invest in sustainable business practices that ensure the long-term health of both the company and its workforce.
“The massive corporate tax cut in the 2017 GOP tax reform led to an explosion of stock buybacks, a financial scam that artificially inflates the value of CEO stock-based pay,” said Sarah Anderson, author of the IPS report. “This wasteful practice is particularly obscene when the companies are paying poverty wages.”
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