Remember the concept of frontline workers? Corporate America certainly doesn’t.
We once hailed these workers as heroes for doing the hard, often drudgerous work that, it turned out, actually kept the world spinning while the rest of us sat at home — all while a deadly and debilitating virus floated through their workplaces. We promised that once it was all over, we wouldn’t just forget their sacrifice, and would make sure they were at least decently compensated.
That promise was squarely broken, we’re told by a new report from the Brookings Institution, which examines where the enormous profits accrued over the course of the pandemic actually went. According to the report, despite pledging even before the pandemic to pay their workers fairly, none of the twenty-two leading companies Brookings looked at pay their employees a living wage, they overwhelmingly funneled excess profits into stock buybacks and executive pay, and they let their workers bear the brunt of whatever financial difficulties they experienced.
These companies, from Amazon and Chipotle to McDonald’s and Target, were well-placed to live up to a 2019 Business Roundtable pledge they signed vowing fair pay and “important benefits” to the more than 7 million frontline workers they employ. Their profits rose 18 percent over the first seven quarters of the pandemic to a total of $213 billion, with the twelve best-performing companies seeing a jump of 45 percent after posting their best years on record. Meanwhile, a skyrocketing stock market saw a $1.5 trillion gain in the wealth of shareholders.
Yet little of this trickled down to the average worker. At least two-thirds of the firms don’t pay so much as half their workforce a living wage — the bare minimum needed to cover basic life costs, or around $17.70 per hour as of October 2021 — while only one, Costco, had a minimum wage ($17 an hour) that was anywhere close to it.
While most companies did offer higher wages through a temporary, pandemic-specific policy of bonuses and hazard pay, these gains were modest, and were ultimately slashed to between just 2-5 percent by October 2021 as a result of inflation — and likely almost entirely erased by further inflation in the months since then.
“When we calculated companies’ 2020 expenditures on Covid pay, we found that most companies had the resources to raise pay more than they did,” states the report.
While these companies’ workers saw their wages increase by a total of $27 billion over the pandemic, the twelve best performing companies alone spent $100 billion on dividends and stock buybacks over the same period. Overall, this period saw a five-to-one ratio of spending on the latter versus added pay for workers, with the report’s authors estimating that sixteen companies that bought $50 billion of their own shares could’ve raised their median worker pay by 40 percent instead.
With stock buybacks pushing these companies’ share prices up, the report concludes that the 6 million richest households saw a gain of $140,000 per family over the pandemic, compared to the extra $3,700 the average worker got. Just five companies saw a rise in real profits of 41 percent, while real wages went up by only 5 percent. And CEOs across all twenty-two firms benefited from an average pay of $22 million, compared to $25,000 for their median worker — a stunning 904-to-1 ratio that’s extra galling considering it was the workers who risked sickness and death to produce this wealth, while the CEOs lounged on yachts and spaceships far from any health risk.
Even so, these twenty-two companies were quick to let workers shoulder the burden when times got tough. “All of the companies in this analysis generated additional wealth for their shareholders during the twenty-two months we studied — even companies that experienced major financial losses and furloughed tens of thousands of workers,” states the report. Disney, for instance, decided to give an extra four thousand workers the axe just a day before its share price recovered to its pre-pandemic number. Best Buy’s share price was salvaged just a few months into the pandemic, at which point twenty-five thousand workers were furloughed.
The report’s findings constitute an enormous betrayal of the frontline workers who not just ensured these massive profits, overwhelmingly siphoned off by the richest, but who toiled at the behest of all those who had the luxury of working remotely while riding out the pandemic.
It also helps explain the continuing, simmering disgruntlement that has permeated public opinion under a Democratic government, with inflation having eroded the bulk of workers’ gains, and those at the top hoarding an ever larger share of the wealth for themselves. Unless something changes, this ongoing gross inequality will undercut any message about a recovered economy, just as it did once upon a time under a previous Democratic administration.