Are Stock Buybacks Starving the Economy?  – The Atlantic

Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.

Their new paper contributes to a growing body of research that might help explain why economic growth is so sluggish, productivity so low, and increases in worker compensation so piddling, even as the stock market is surging and corporate profits are at historical highs. Companies are working overtime to make their owners richer in the short term, more so than to improve their longer-term competitiveness or to invest in their workers.

Source: Are Stock Buybacks Starving the Economy?  – The Atlantic

One Comment Add yours

  1. WOW – what big news! Once illegal? I’d love to know when it was illegal and when it became legal. It makes so much sense and the potential for a different dynamic is there if the awareness and the public will develops – and of course the political leadership…

    Like

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