The Harms of Shareholder Primacy
In these first few months of 2022, stock buybacks have neared record highs, as companies try to boost per-share profit and reassure investors amid a volatile market.
That’s bad for our economy, as Roosevelt Fellow Lenore Palladino explained at a hearing before the Joint Economic Committee this week—hurting workers; weakening innovation; and disproportionately benefiting wealthy, white households.
“[T]he focus on spending corporate funds on shareholders has left companies ill-equipped to face shocks and been used as a justification for holding down labor costs,” Palladino said in her written testimony.
For example, while facing allegations of unsafe working conditions and poor compensation, "Walmart, and now Amazon, both spend billions of dollars on stock buybacks that could have been instead invested in their employees,” Palladino said.
“[I]t is time to strengthen our commitment to American productivity by reorienting our public policy away from enabling a single-minded focus on share prices and towards enabling innovation.”
Read Palladino’s full testimony here.
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