Thank God America’s Richest  Investors Did OK During The Pandemic!


The pandemic, we’re told, was just a terrible time for US businesses, especially small businesses like restaurants and places that depended on tourism. Airlines certainly took a hit, for a time. But quite a few of America’s biggest corporations actually made out quite well, with huge benefits for their investors, a new Brookings study fnds. The study looked at 22 big American corporations that did reasonably well during the pandemic, like Amazon, Disney, FedEx, Home Depot, McDonald’s, and Target, among others.

Turns out that the 22 corporations studied generated a whopping $1.5 trillion in additional wealth for their shareholders, which must also have been welcome news to the companies’ employees, too, because as we all know, when corporations do well, their workers do, too! That’s just basic eco … oh, wait, maybe that might have been true in olden times, but in reality, most employees saw very little improvement in their pay, although many did at least get the additional risk of working during the pandemic and getting yelled at by customers who refused to wear masks.

The Brookings executive summary summarizes who needs to be executed (with votes):

In general, worker pay is still far too low, compared to either a living wage or company financial performance; shareholders reaped tremendous rewards while workers shared only minimally in company success; and executives and shareholders were mostly insulated from losses that workers bore.

Here’s a fun little table, noting that shareholder earnings increased 57 times as much as the gains made by the workers who made those fabulous profits possible:

Clearly, the smart move during the pandemic would have been to quit your job, become a member of the investor class, and watch the profits roll in. We wonder why so few minimum-wage workers chose that option.


As Judd Legum explains in his Popular Information newsletter,

Those 22 corporations employ about 7 million workers. Those workers collectively received $27 billion in additional pay during the first seven quarters of the pandemic. That sounds like a lot, but it amounts to about $3700 per worker or a less than $1 per hour increase for a full-time employee.

Contrast that with the benefits to the richest five percent of US households, the six million families who hold most of the stock in the USA: They each saw, on average, an increase of $140,000 per household, which is rather a lot more than the increased wages. Like, nearly six times the median wage of the workers at those 22 companies. Not the median increase in earnings, but their actual median annual wage.

And if you want to really stoke some class resentment — and boy howdy, do we ever! — Brookings points out that the CEOs of the 22 companies raked in nearly half a billion dollars in compensation in 2020 alone.

On average, CEO pay topped $22 million, while the median employee earned, on average, less than $25,000. Across all 22 companies, the average ratio of CEO pay to median employee pay was 904 to 1.

We should note here that the median income for workers in the 22 companies is also significantly lower than the 2019 US national median income of just under $54,500, which makes sense because not a lot of doctors and lawyers and stock analysts are stocking shelves at Walmart.

Also too, the study narrows in on a dozen big companies that “won” the pandemic, Legum says:

Albertsons, Amazon, Costco, CVS, Dollar General, FedEx, Home Depot, Kroger, Lowe’s, Target, UPS, and Walmart. These are all businesses that benefited from the shift to eating at home and shopping online. As the pandemic wanes, these companies are poised to continue to benefit from permanent shifts in consumer behavior.

From January 2020 to November 2021, these 12 companies saw their profits increase “$56.1 billion, or 45%, compared to the previous seven quarters.” Very little of this extra cash made its way to workers.

At two of the dozen Pandemic Champs, UPS and Dollar General, workers got no pandemic/”hazard pay” increases during the worst months of the outbreaks. Other companies did raise salaries temporarily; Home Depot was actually fairly generous, with a $3500 bonus for full-time workers. That was a 13 percent pay hike. On average, though, temporary pandemic pay went up only about six percent.

Also too, the tight labor market helped out most workers a little, as employers increased wages to hold on to employees. Only Lowes and Dollar General, out of the winning dozen companies, saw no pay increases at all. But damn it, much of those wage increases got et up by inflation, resulting in real wage hikes of only a percent or two. (And never mind the “Joe Biden did inflation” narrative from Republicans: Inflation increased worldwide, mostly due to increased demand and whacked-out supply chains, as well as just plain corporate grasping.)

Brookings points out that a lot of the disparities were due to conscious choices by the 22 companies. Rather than sharing their increased profits with employees, the companies handed the extra cash to shareholders, in the form of dividends and in stock buybacks, which increase share values for stockholders. All told, the 22 companies devoted five times as much of their increased profits to enriching shareholders as they did on additional employee pay of all kinds (including temporary pandemic bonus pay).

Had the companies devoted the cash they spent on stock buybacks to their workers instead (Ha! Ha!), the average wage increase would have amounted to around 40 percent. We suppose that might have caused inflation, though, so thank goodness the already-rich investor class got the benefits instead.

The report points out that this arrangement, where workers’ pay remains static while investors make out like bandits, didn’t used to be the case in pre-Reaganomics times, either:

Workers, at least white men, used to share in company success through higher wages. In the three decades after World War II, the economy divided gains more equitably between workers and shareholders; worker pay and the S&P 500 grew at roughly the same rate. But in the late 1970s, economic productivity and worker pay diverged dramatically. In the subsequent three decades, productivity has risen more than three times as much as compensation. Instead of boosting pay for the average worker, increased productivity drove greater compensation for highly paid corporate employees, higher company profits, and higher shareholder returns.

Well sure, but you also have to keep in mind that greed is good, and that with a more diverse workforce, devoting a greater share of profits to employee pay wouldn’t only benefit white men anymore, and is that the kind of America we even want? (It totally is.)

In conclusion, next time there’s a pandemic or other shock to the economy, make sure you’re already well off so you can come out of the downturn in better shape.

[Brookings Metro / Popular Information]

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