Five major U.S. companies have dished out hundreds of millions of dollars in dividends to company shareholders while simultaneously laying off thousands of workers.
According to The Washington Post, since the coronavirus pandemic was declared, Caterpillar has suspended operations at two plants and a foundry, Levi Strauss has closed stores, and toolmaker Stanley Black & Decker has been planning layoffs and furloughs. Steelcase, an office furniture manufacturer, and World Wrestling Entertainment have also shed employees.
These five companies have rewarded a combined $700 million to their shareholders and they are not alone. Many big companies are making grand decisions as to who will have to suffer from their company’s budget cuts.
Many, including Senator Bernie Sanders, are outraged these companies are not using that money to keep their employees employed.
Outrageous. Instead of spending hundreds of millions of dollars on dividends to enrich wealthy shareholders, Caterpillar, Black & Decker, Levi Strauss and other corporations should be using this money to compensate the thousands of workers they laid off. https://t.co/MUArk4FefD— Bernie Sanders (@SenSanders) May 6, 2020
“Executives say the layoffs support the long-term health of their companies, and often the executives are giving up a piece of their salaries. Furloughed workers can apply for unemployment benefits. But distributing millions of dollars to shareholders while leaving many workers without a paycheck is unfair, critics argue, and belies the repeated statements from executives about their concern for employees’ welfare during the coronavirus crisis,” says The Washington Post reporter Peter Whoriskey.
While the practice of companies primarily focusing on serving their shareholders has been accepted since the 1980s, an increase in criticism over this business strategy has brought many workers rights advocates, and even business executives, to challenge this way of business.
In August, a group of companies from the Business Roundtable, an advocacy organization composed of the chief executives from dozens of the United States’ largest corporations, announced that they were dropping their insistence on “shareholder primacy – that corporations exist principally to serve shareholders,” states The Washington Post article.
181 chief executives signed a statement promising the Business Roundtable they would consider customers, suppliers, and workers when making budgeting decisions.
Caterpillar, Stanley Black & Decker, and Steelcase were part of those 181 chief executives who signed.