What are buybacks?
Buybacks are a financial maneuver in which a company manipulates its stock prices by using cash and profits to purchase its own shares. By pumping this money back into the company and reducing the number of shares, the company's stock price automatically goes up. Buybacks were illegal in the U.S. until 1982.
By buying back their own stock, the company is artificially boosting the stock price without actually becoming more profitable or hiring more workers. These gains go directly to wealthy investors – not to workers.
Buybacks have exploded this year after the passage of the Republican corporate tax cut bill, with companies poised to buy back the largest number of shares in at least 10 years.
Why should workers care?
Major corporations, including CWA employers like AT&T, Verizon, American Airlines, and many more made big promises on what they would do if the Republican corporate tax bill passed. President Trump promised that the bill would guarantee a $4000 raise for every worker.
AT&T announced after the tax bill passed that they will pay workers a one-time $1,000 bonus – a far cry from the $4,000 salary increase promised by President Trump. In 2016, AT&T brought in $163 billion in revenue and made $13 billion in profit. This success was built on the hard work of CWA members at AT&T. But instead of sharing that success, AT&T management has used those profits to pay themselves and funneled billions to investors through buybacks. On top of all this, AT&T announced layoffs of techs and customer service reps, while continuing to outsource work to low-wage vendors both in the U.S. and offshore.
In 2016, Verizon bought back $5 billion in stock just before the CWA strike, while claiming it didn't have enough money to provide workers better job security.
How to fight back.
The Republican corporate tax bill is a massive giveaway to the wealthiest and the top 1%, paid for by working families. CWAers are on the front lines urging Congress to pass legislation to fix some of the worst parts of the bill.
Senator Tammy Baldwin (D-WI) has introduced the Reward Work Act, supported by CWA, which would prohibit many of these harmful buybacks.
In addition to causing a surge in buybacks, the tax bill actually contained incentives for companies to offshore jobs. Democrats in Congress are rolling out legislation to crack down on these offshoring incentives and keep jobs in the U.S.
Congressman Lloyd Doggett (D, TX-35) and Congresswoman Rosa DeLauro (D, CT-3) have introduced the No Tax Breaks for Outsourcing Act with Senator Sheldon Whitehouse (D-RI). The bill, which CWA supports, would end tax incentives created by President Trump's tax law to outsource jobs and shift profits offshore.