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Vox Ignores the Role that Stock Buybacks Play in Walmart's Low Wages

Joseph Hines

Earlier this week Vox gave welcome attention to whether CEO pay would benefit workers, but it didn’t go far enough in examining the company's wage inequality. In response to recent news of a college president giving up part of his compensation to give lower-wage workers a raise, Danielle Kurtzleben pivoted to Walmart, asking "what if Walmart's CEO took a pay cut for his workers?"

She crunches the numbers and concludes that if you redistributed all of its executive compensation and “limit it to the 525,000 people who earn $25,000 or less per year, and you get around $147 per person — helpful to someone with a small paycheck and a stack of bills, but still not that big.”

While Kurtzleben admits that redirecting CEO pay across the economy could give workers significant wage increases, she misses the mark by dismissing Walmart’s annual stock buybacks, their other form of compensation inequality. In focusing solely on executives, she misses where Walmart's profits have been going—shareholders. 

While Walmart may have spent *only* $77 million on executive pay in 2014, the company spent $6.6 billion buying back shares of their own stock the year before. And evidence shows such buybacks do little to increase productivity: Demos’ report A Higher Wage Is Possible found that Walmart’s share buybacks consolidate ownership “did nothing to boost Walmart’s productivity of bottom line and has no direct benefit from Walmart’s customers or frontline employees."

What do stock buybacks do for Walmart? They consolidate the influence of the richest family in the country. The six heirs of Sam Walton, already worth an obscene $144.7 billion, made $2.66 billion in dividend payments off of Walmart shares in 2012, bumping up their share of Walmart stock above 50%.

But those unproductive profits could be much better spent.

The same report found that that redirecting what Walmart spent on stock buybacks in 2012 alone would be enough to give every low-wage worker over $5 more an hour that year. With Walmart as the country’s largest private employer, such a big raise could put a dent in the low-wage economy.

Some large low-wage employers appear to be coming on board with the idea of redirecting stock buybacks. In May, shareholders at Chipotle voted against an executive compensation package, particularly focusing on their excessive shareholder package. Policy Analyst Catherine Ruetschlin wrote at the time: 

The recent, synergetic, shareholder and worker activism reveals a new alliance of material interests between stakeholders in disparate companies, as lopsided human capital management generates volatility that starts in the sectors with greatest inequality but ripples economy-wide.


The common interest in corporate governance will only strengthen over the next decade, as industries like fast food and retail add a large share of the new jobs in the labor market, intensifying the broader effects of income inequality like instability and slow growth. 

Workers would benefit greatly from a growing shareholder awareness of low pay. Focusing on CEO pay, which has exploded in recent years, is important, and a basic fairness issue, but that focus should also be expanded to include stock buybacks.