Coronavirus crash shows major corporations broke the No. 1 rule of personal finance
Giant employers of lower-wage workers like McDonald's and Starbucks spent and borrowed money for stock buybacks and dividends.Labor unions and experts say all that shareholder money could have gone to worker raises and to shore up the balance sheet during the bull market to better prepare for a financial downturn.An employee hands a drive-thru customer his order at a McDonald's restaurant in Oak Brook, Illinois.
Some of America's biggest employers are beginning to discover the truth of this maxim as the coronavirus crisis catches them short of cash just as business crashes. Together, the restaurant, leisure and hospitality, and airline industries account for about 17 million U.S. jobs. And there's another reason why more workers are likely to get laid off if the crisis persists: Their employers are short of cash often because of stock buybacks.from the Trump administration to offer some form of federal bailouts to industries like casinos, airlines and maybe even restaurants hit hard by the sudden loss of business as states and municipalities order non-essential businesses to close or curtail their operations.
"This is more of the exaltation of shareholders over sensible business planning,'' said Judy Conti, government affairs director of the left-leaning National Employment Law Project. "It's yet another indicator of the failure of the [2017] tax bill. It didn't encourage higher wages or new jobs, but more greedy practices.
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