Via our subscription service with POLITICO Pro comes this report that Sen. Sherrod Brown on Wednesday unveiled a plan that would escalate Democrats’ assault on corporate stock buybacks by forcing companies to raise wages when they spend millions to boost their share price.
The Ohio Democrat offered legislation that would not only curb firms’ share repurchases but also create a “worker dividend” that would entitle employees of public companies to $1 for every $1 million spent on stock buybacks and dividend increases.
“My proposal is simple,” Brown said in remarks prepared for a speech at the National Press Club in Washington. “If corporations want to transfer wealth to Wall Street, workers have to get a proportionate share of the pie.”
Democrats over the last year have ramped up criticism of stock buybacks, in which publicly traded companies purchase their own stock to boost their share price.
Critics of the practice, which increased after Republicans enacted tax cuts in 2017, argue that it benefits already well-off Americans — not workers — and siphons capital from long-term economic investments.
Companies spent more than $800 billion last year on share repurchases, according to the Wall Street Journal, the most ever in a single year.
Brown said it would be simple for companies to avoid paying his worker dividend — don’t do billions in buybacks.
“Instead, invest that money in raising workers’ wages, establishing on-the-job training programs or making capital investments,” he said.
Brown, the top Democrat on the Senate Banking Committee, used his bill rollout to knock JPMorgan Chase, which he said bought back about $20 billion of its own stock last year.
JPMorgan CEO Jamie Dimon is one of the most prominent defenders of buybacks, which he has said are secondary to long-term investing but “an essential part of proper capital allocation.” JPMorgan is also a major employer in Brown’s home state.
According to a worker dividend calculator that Brown is offering on his Senate web site, he said a bank teller at JPMorgan Chase would get $20,000.
“That worker dividend would be long overdue for the bank’s tellers and other workers, who are vital to the bank’s success,” he said.
The U.S. Chamber of Commerce wasted no time this morning denouncing Brown’s legislation. The Business Roundtable, which represents top CEOs and is chaired by Dimon, also rushed to the defense of buybacks, saying they don’t displace investments in workers and long-term growth.
“Money returned to shareholders helps fuel the economy,” the Business Roundtable said in a statement. “It is often reinvested in start-ups or loaned to businesses that are growing and hiring.”
At his press conference Wednesday, Brown acknowledged the huge political hurdles the bill would face. But he signaled he wouldn’t stop talking about it anytime soon, meaning it could be a new political headache for corporate America over the coming months.
He likened it to the “dignity of work” mantra he has promoted this year to influence the 2020 presidential campaign.
“My message is not anti-corporate,” he said. “My message is pro-worker. I think when you talk about the dignity of work, it’s not just a slogan. It’s how our candidate for president, whoever she is or he is, will be elected. It’s how you should campaign. It’s who we are, and it’s how we should govern.”
Brown compared the long-shot bill to an effort he was involved in to enact an extension of the Earned Income Tax Credit and Child Tax Credit in 2015.
“We hope to do the same thing on this,” he said.
Brown said there was not yet a House counterpart of his bill but that he expected to have co-sponsors.