Critics say Sanders’s bill would constrict the flow of capital by preventing firms from buying back shares from their investors — money those investors then plow back into to the broader economy.
Supporters say the plan would benefit a huge number of underpaid workers as the company’s founders, the Walton family, have seen their wealth balloon dramatically amid a broader increase of wealth inequality in the United States.
In a statement, Sanders pointed out that the Walton family is the richest in America, with an estimated net worth of about $180 billion. The Walton family owns about 50 percent of Walmart’s stock, according to the company, while the starting wage for a Walmart employee is $11 an hour — which translates into a little more than $19,000 a year, according to the Roosevelt Institute, a left-leaning think tank.
“Most Walmart retail workers are working for horrendously low wages with minimal benefits. The wealthiest family in America must pay its workers a living wage, and the Stop Walmart Act will do just that,” said Sanders, who is introducing the bill along with Rep. Ro Khanna (D-Calif.). “Amazon did the right thing by raising their minimum wage to $15 an hour. Walmart can and must do the same.”
In a statement, a Walmart spokesman said the company has already raised starting wages by more than 50 percent in the last three years, while awarding $625 million in quarterly cash bonuses over the last year as well as bolstering paid family leave, paid time off and job-training opportunities.
Looking at all compensation — including benefits, paid time off and its 401(k) match — the average hourly compensation for Walmart employees is more than $17.50 an hour, the company said.
“Our big focus for our company is making it easy for people to get in the front door for a job and empowering them to grow as fast as their skill will take them,” said Kory Lundberg, the Walmart spokesman. “We have been very deliberate about our job offerings, and we will continue listening to our people and investing in the training, benefits and wages that they tell us are important.”
Sanders’s legislation, though not likely to be signed into law, given Republican control of the White House and Senate, proposes fining big companies that buy back stock while failing to pay employees $15 an hour. Corporate executives that fail to follow the rule would also be barred from their jobs. (A big company is defined as one with more than 500 employees.)
Raising Walmart’s wages to at least $15 an hour would cost the company $3.8 billion, said Ken Jacobs, chair of the University of California at Berkeley Labor Center. Walmart announced last year that it would authorize $20 billion in stock buybacks over a two-year period.
“Overall, the cost to Walmart of doing this would be a tiny, tiny fraction of their revenues, while its impact on workers’ lives would be huge,” Jacobs said.
Walmart workers say they are encouraged by Amazon’s recent decision to hike wages. Kristi Branstetter, 54, a Walmart employee for seven years in Kansas City, Mo., said she struggles to pay her rent, utility and grocery bills every month on $11 an hour of pay. She was with about two dozen other Walmart employees when she learned that Amazon had agreed to the $15 an hour minimum wage.
“We said, ‘Hey, if Amazon can do it, Walmart can do it. Walmart, it’s your move. Now, it’s your turn,’” said Branstetter, who cleans and stocks shelves at the store. “That really encouraged us to fight harder.”
Some critics called the legislation counterproductive. Samuel Hammond, director of poverty and welfare policy at the libertarian-leaning Niskanen Center, said stock buybacks help circulate capital to faster-growing firms. When companies repurchase stock from investors, those investors are free to put that cash into other businesses and companies.
The Republican tax law passed last fall left companies flush with cash by lowering tax rates, which in turn set off a boom in stock buybacks. Liberals have pointed out that these stock buybacks primarily enrich wealthy shareholders, while investors have defended buybacks as a sign of a quickly growing economy.
“Preventing investors from buying back shares would essentially trap capital within the very firms that don't need it, which will hurt wages and productivity in the long run,” Hammond said in an email. “This is the latest in the worrying trend of politicians threatening specific companies with ruinous regulations in order to win short term concessions.”
But other experts disagreed. Lenore Palladino, a senior economist and policy counsel at the think tank the Roosevelt Institute, said there is no evidence buybacks generate a surge in private investment rather than simply enriching shareholders. Companies did not begin buying back their stock until regulatory changes under President Ronald Reagan in the 1980s, she noted.
“Of course wealthy shareholders could reinvest in other firms, but the data shows that’s not what happens,” Palladino said. “Over the last 20 years, more money has been generally been flowing out to shareholders than has been invested back into public corporations.”