Shareholders gained 50 times as much as U.S. workers in pandemic

A hiring sign at a McDonald's restaurant.
Employees at 22 companies including McDonald’s saw wage gains of 2% to 5% during the pandemic, according to a new study. Shareholders of those companies received 50 times as much value.
(Associated Press)

Shareholders in some of the biggest U.S. companies reaped wealth gains in the pandemic that outpaced pay increases for their employees by more than 50 to 1, according to a study by the Brookings Institution.

The report — which focused on 22 industry leaders, including Inc. and McDonald’s Corp. — found that stockholders added some $1.5 trillion in wealth from January 2020 to October 2021. The companies spent about $27 billion on additional pay and bonuses, and five times that amount on dividends and stock buybacks, the Washington think tank said.

Brookings said it was seeking to measure the corporations by the standard they set for themselves — specifically, an August 2019 declaration organized by the Business Roundtable and signed by 181 chief executives. That document promised a shift away from shareholder primacy toward a “more inclusive” corporate model that would put more weight on other stakeholders, including workers.


“Nearly all of the companies fell short,” analysts Molly Kinder, Katie Bach and Laura Stateler wrote in the report published Thursday. “Financial gains benefited wealthy shareholders and executives, while frontline workers experienced the greatest losses and benefited minimally.”

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The research underscores wealth gaps that widened during the pandemic, as the gains from soaring asset prices — especially stocks, in which ownership skews heavily toward the highest earners — outpaced pay increases and extra government benefits that flowed to workers.

Across the 22 companies in the Brookings study, the average increase in inflation-adjusted wages over the period ranged from 2% to 5%. Because of the “very low starting point, the vast majority of workers still earn too little to get by” — with only seven of the 22 firms paying at least half of their workers enough to cover basic expenses, Brookings said.

Meanwhile, 16 businesses in the group carried out share buybacks worth some $50 billion, enough to have raised the annual pay of their median worker by about 40%, Brookings found.

Rising pay, especially for low-wage jobs, has been a feature of pandemic labor markets in which workers are in shorter supply. Amazon boosted some starting wages to $18 an hour last year and publicly supports a $15 an hour base wage in the U.S. The leader of a push to unionize the company’s warehouses says workers are seeking $30 an hour. McDonald’s raised average pay by about 10% last year.

Some financial analysts say the trend represents a threat to corporate profits. Morgan Stanley strategists warned that companies will have a tougher time raising prices to offset the higher costs of labor, eating into margins.


The Brookings researchers said they monitored wage announcements and company disclosures, and corresponded with each company to confirm the data. Only two companies — Walt Disney Co. and Dollar General Corp. — didn’t respond, they said.