Companies across America are cutting staff and adding to the nearly 30 million unemployed in the country amid the coronavirus pandemic. At the same time, some are rewarding their shareholders handsomely, reports the Washington Post. Five companies have given more than $700 million in cash dividends to shareholders while closing plants and laying off people; Caterpillar, Levi Strauss, Stanley Black & Decker, Steelcase, and World Wrestling Entertainment.
Many companies are having to choose where to trim their fat first -- and many are choosing to lay off the little guy and continue to feed investors instead. The companies say that doing this will ensure the longevity of their business, and point out that CEOs and higher-ups are taking salary cuts. But to slash workforces so heavily while letting investors cash in as if things were normal is unfair, say critics.
Caterpillar, for example, announced a $500 million distribution to shareholders April 8, about two weeks after indicating that operations at some plants would stop. The company declined to say how many workers are affected.
“We are taking a variety of actions globally, but we aren’t going to discuss the number of impacted people,” Caterpillar spokeswoman Kate Kenny said in an email.
Even as Caterpillar says goodbye to loyal employees, their website shares an ironic statement. They promise to uphold “dedication and service to the safety, health and well-being of our team and the communities they serve remain strong.”
Large U.S. companies pay quarterly dividends and sometimes increase them regularly to keep their share price high. During a pandemic where the market is crashing, businesses are worried about holding these dividends back.
Critics like William Lazonick, an emeritus economics professor at the University of Massachusetts at Lowell, says that companies should use profits to reinvest in employees and production instead. But he’s also not surprised.
“In a downturn like this, the first thing a company should do is give up any distributions to shareholders,” Lazonick said. “But in a crisis, companies will differ. Some will care … and some will rob the workers, who should expect that their continued employment will be the company’s first concern.”
On April 7th, Levi Strauss announced that they would stop paying store workers, and about 4,000 are now on furlough. The same day, the company announced that it was returning $32 million to shareholders.
Stanley Black & Decker announced on April 2nd that it would furlough or layoff employees because of the virus. Two weeks later, it issued a dividend to shareholders of about $106 million.
Steelcase announced March 24th that the company would close plants in California, Michigan, Pennsylvania, and Texas. Steelcase employs nearly 12,000 people. The same day, it issued a dividend of about $8 million to shareholders.
The Gap, Darden Restaurants (which owns the Olive Garden and LongHorn Steakhouse), American Eagle Outfitters, and other companies have delayed their shareholder dividends.