Workers Deserve Cash If Companies Do Stock Buybacks: Cory Booker

NEWARK, NJ — If a publicly-traded company has the money to buy back its own stock, its employees deserve their fair cut of the profit, too, U.S. Sen. Cory Booker says.

Recently, Booker – who represents New Jersey – and two fellow Democrats, Sen. Bob Casey of Pennsylvania and Rep. Joe Kennedy III of Maryland, reintroduced a proposed federal law they’ve dubbed the Worker Dividend Act.

The bill aims to stymie corporations who pump their profits into stock buybacks instead of using them to raise wages for workers, the lawmakers said in a joint statement.

Under the bill, if a publicly-traded company buys back its stocks to enrich its shareholders and CEO, it would also have to pay 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,” said Booker, a current Newark resident and former mayor of the city.

“A company that has the profits to reward its shareholders should also reward the employees who are helping create those profits,” Booker continued. “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.”

According to Booker, 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 Tax Cuts and Jobs Act of 2017, stock buybacks surged to record highs of $1 trillion in 2018, while workers across the country faced wage stagnation. 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, Booker said.

Here’s how the proposed law would help to undo that damage, Booker said:

“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).”

Booker has been an advocate for other economic justice issues involving wealth inequality and corporate responsibility. 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. And 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.

• See related article: Sen. Booker Takes On 'Foodopoly,' Wants To Halt Big Agro Mergers
• See related article: End 'Wasteful' Tax Loophole For Pro Sports Teams, Cory Booker Says

Don’t forget to visit the Patch Newark Facebook page. Learn more about posting announcements or events to your local Patch site. Send local news tips and correction requests to eric.kiefer@patch.com