Representatives García, DeFazio, and Khanna Reintroduce Legislation Increase Worker Power and Rein in Harmful Stock Buybacks

WASHINGTON, DC–   Today, Representative Jesús "Chuy" García (IL-04), a member of the House Committee on Financial Services and the Congressional Labor Caucus, Representative Peter DeFazio (OR-04), and Representative Ro Khanna (CA-17), reintroduced the Reward Work Act to increase worker power and curb the ability of corporations to artificially increase their stock prices by buying back their own stock at the expense of workers, constituents, and the U.S. economy.

The Reward Work Act reins in stock buybacks and corporate greed by repealing a Regan-era Securities and Exchange Commission (SEC) rule that allows corporations to buy back their stock on the open market. Instead, it allows them to only repurchase stock through tender offers, which are subject to greater disclosure. Crucially, this legislation empowers workers by requiring public companies to allow workers to directly elect one-third of their company’s board of directors.

Reps. García, Defazio, and Khanna reintroduced the bill in partnership with Reps. Cori Bush (MO-01), Steve Cohen (TN-09), Eleanor Holmes Norton (DC-0), Pramila Jayapal (WA-07), Barbara Lee (CA-13), Alexandria Ocasio-Cortez (NY-14), Ilhan Omar (MN-05), Mark Pocan (WI-02), Jan Schakowsky (IL-09), Rashida Tlaib (MI-13), and Bonnie Watson Coleman (NJ-12).

This legislation is supported by the Communications Workers of America (CWA), Public Citizen, Americans for Financial Reform (AFR), Institute for Policy Studies Global Economy Project, Groundwork Collaborative, SEIU, AFL-CIO, Indivisible, and Take On Wall Street.

The text of the bill can be found here.

“Stock buybacks only exist to pad the pockets of already wealthy corporate executives and shareholders. Companies buy back their stock using funds that could be used to increase worker pay or invest in resources needed to provide high-quality goods and services, leading to higher levels of inequality and business practices that can harm everyday people,” said Rep. García.  “In 2021, corporations reported $2.8 trillion in profits and spent a record amount – $882 billion – on stock buybacks while wages for many earners barely kept up with the pace of inflation. It’s time we stop allowing corporate executives to make millions by buying back their own stock and demand they invest in their workers instead.”

“Corporate greed is at the heart of stock buyback initiatives, which place corporate executives and wealthy shareholders ahead of American workers and families,” Rep. DeFazio said. “It is unconscionable that companies continue to rake in billions in record-breaking profits through tax breaks and buybacks while hardworking Americans struggle or are laid off. Our legislation would write this wrong and once again ban corporations from engaging in stock buybacks and manipulating the market – finally correcting the Reagan Administration’s absurd decision to allow corporations to engage in this practice.”

“Prior to 1982, stock buybacks were considered stock manipulation, but President Reagan's Securities and Exchange Commission implemented a rule to exempt them. Since then, we’ve seen corporations spending money on boosting their own stock at the expense of investing in innovation and their workforce. During the pandemic, shareholder wealth skyrocketed while working class Americans suffered. I'm proud to join Rep. Garcia as a cosponsor of the Reward Work Act to repeal this rule that has only exacerbated inequality in our country," said Rep. Khanna.

"Big corporations exacerbate economic inequality and the racial wealth gap through the rampant use of stock buybacks, which benefit corporate executives and wealthy shareholders at the expense of workers, communities, and the planet," said Natalia Renta, Senior Policy Counsel at Americans for Financial Reform. "By getting rid of a 1982 loophole that opened the floodgates to corporations spending trillions of dollars on stock buybacks and requiring a third of board members be elected by workers, the Reward Work Act would create the conditions for a more just, sustainable, and equitable economy."

 "Corporations like Apple, GE, and Wells Fargo have consistently used stock buybacks to enrich CEOs and wealthy shareholders at the expense of workers. Far too often, companies cut jobs or lower wages and benefits all while conducting massive stock buybacks. Instead, they could use those profits to increase worker pay and benefits, invest in new equipment, or expand into new markets and create more jobs,” said Dan Mauer, Director of Government Affairs at the Communications Workers of America (CWA). “CWA is proud to endorse the Reward Work Act, which will help ensure that companies invest in their workers, who are the backbone of any company's success."

 "Let’s be clear: Stock buybacks are just another way for greedy corporations to jack up their share prices and pump more money into the hands of executives and other wealthy investors,” said Mary Kay Henry, SEIU’s International President. “Responding to workers’ demands, Congress has already banned stock buybacks from airlines that took federal funds. It’s time to pass the Reward Work Act and end this shady corporate practice across industries and insist that CEOs pay workers living wages and allow them to join together in unions.”

"Since the early 1980s, corporate executives have used stock buybacks to artificially juice share prices so they can pay themselves and other rich investors," said Porter McConnell, Take on Wall Street Campaign Director. "Some companies are even borrowing money to buy back stock, and the companies that do invest their capital in their workers or research and development instead of buying back stock actually get dinged for it. Representatives Garcia, DeFazio, and Khanna’s Reward Work Act would put an end to this madness, and contribute to a healthier and fairer economy."

"Last year, Lowe's spent $13 billion on stock buybacks -- enough to give every one of their 325,000 employees a $40,000 raise. Instead, median worker pay at the big box store fell 7.6 percent while the CEO took home $18 million," pointed out Sarah Anderson, the lead author of the Institute for Policy Studies's annual Executive Excess report. "This is just one example that underscores the need for policymakers to use every tool in their toolbox to crack down on wasteful stock buybacks that enrich wealthy CEOs while doing nothing for workers." 

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