business news in context, analysis with attitude

• The Washington Post reports that retailer Home Depot has announced that it plans a $15 billion share buyback, “a move that will reward shareholders including chief executive Craig Menear and other top executives.”

And that’s before a probable conference committee agreement between the US Senate and House of Representatives that would result in a significant corporate tax cut in the US, which proponents have argued would result in companies making major capital investments, increased hiring and higher wages - meaning that the tax cuts would “trickle down” to middle class and working class Americans.

The Post writes that “Home Depot’s statement was a reminder that corporate America may have other plans for that cash,” and that “several companies already have indicated that they will use excess funds to pay off debt, increase dividend payments or repurchase their own shares rather than create new jobs or raise wages. On Wall Street, the consensus is that workers will be last in line behind shareholders, creditors and investment bankers when the extra corporate cash is distributed.”

At the same time, many companies, if they plan to invest in capital improvements, could spend the money automating their processes, which won’t do much for worker salaries.
KC's View:
I just think this is something to which it is important to pay attention, if only because how much extra cash ends up in the pockets of average Americans should matter to retailers that depend on people having money to spend.

To be fair, we don’t know how this is all going to play out. It is possible that more money in corporate coffers will drive business growth, which will put upward pressure on wages, all of which will create greater prosperity for all. Or, it is possible that very little will trickle down to workers/consumers. I hope it works out positively, but I remain skeptical because too many CEOs are compensated based on how low they can keep labor costs and how high they can make investor returns.