Stock Buybacks
Ok, just heard a story on an NPR podcast about companies spending money on stock buybacks rather than increasing wages. Apparently Walmart's stock buyback could have given a $10,000/year raise to 10 million employees.
So the argument for the buyback is that publicly traded companies are obligated to reward shareholders, not increase wages. The person said that increased productivity leads to higher wages.
Let me get this right, if productivity increases and you can make the same number of products more cheaply with say half the number of employees, then wages go up?
Why wouldn't the company be obligated to pass those savings on the the shareholders? I mean there is a limit of how many of a product you can sell. Decreasing the price to sell more so you can hire more people would decrease the savings from higher productivity and drive down the price at a certain point.
I don't understand how higher productivity would lead to higher wages if you are still obligated to pass on the profits to the shareholders?
So the argument for the buyback is that publicly traded companies are obligated to reward shareholders, not increase wages. The person said that increased productivity leads to higher wages.
Let me get this right, if productivity increases and you can make the same number of products more cheaply with say half the number of employees, then wages go up?
Why wouldn't the company be obligated to pass those savings on the the shareholders? I mean there is a limit of how many of a product you can sell. Decreasing the price to sell more so you can hire more people would decrease the savings from higher productivity and drive down the price at a certain point.
I don't understand how higher productivity would lead to higher wages if you are still obligated to pass on the profits to the shareholders?
Comments
Post a Comment