‘We are essentially in a new Gilded Age’: As workers get laid off, CEOs and shareholders gobble up hundreds of billions in profits

Yahoo Finance

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We are essentially in a new Gilded Age': As workers get laid off, CEOs and shareholders gobble up hundreds of billions in profits

BYChloe Berger

October 27, 2024

Taking a modern-century spin on “Let them eat cake,” shareholders are having the whole cake, and eating it too.

It’s no shock the boardroom is able to stay above the fray as wealthy members are more equipped to weather economic downturns. But it turns out CEOs and shareholders are walking away with an even greater slice of profits than one might think.

So finds a new report from Oxfam, a British nonprofit focused on eradicating poverty, which analyzed more than 200 U.S. corporations to assess their “inequality footprint.”

Most money ends up funneling into the mouths of those at the top, as 90% (or $1.1 trillion) of the combined $1.25 trillion in net profits for those companies analyzed went to paying wealthy shareholders.

Millionaire aviator Howard Hughes (center) proceeds from the Battery to City Hall in New York on July 14, 1938, after circumnavigating the globe.© Getty Images

Executives are doing quite all right as well.

CEO pay has ballooned since the pandemic hit, increasing by 31% from 2018 to 2022.
“Shareholders and CEO pay have risen to record levels in the aftermath of the COVID-19 crisis,” according to the report.

“The rules are being rigged and the companies are helping to rig them,” Irit Tamir, senior director of Oxfam America’s private sector department, tells Fortune, speaking of company taxation that has gone down due to a strong corporate-lobbying presence.

Why have there been so many tech layoffs?
This past year has been marked by layoffs in the finance, tech, and media sectors as many CEOs claim to need to downsize in light of economic strain.

But it seems as if corporations are doing better than ever.

Revenue and profits at Fortune 500 companies grew significantly between 2014 and 2022, hiking even more in the years after the pandemic hit.
In the same breath that Meta’s Mark Zuckerberg announced layoffs for more than 10,000 workers in the name of a “year of efficiency,” the company announced a fresh $40 billion stock-buyback option.
Less than a year later, Meta announced plans to buy back another $50 billion.

While money was seemingly tight for some, it was an equivalent of Christmas for those at the top: Stock buybacks in 2022 hit a record of $681 billion, per Oxfam.

The consolidation of power at the top has been a decades-long process. The concept of shareholder primacy started to take hold in the 1970s, per Tamir, who added that while companies started to prioritize this group, safeguards for workers were fading as union membership ebbed. In the 1980s, stock buyb